Reverse Mortgage

Reverse Mortgage
Using Your Home Equity for Long Term Care

Reverse Mortgage allows you to convert part of your home equity into cash!

If you’re 62 or older – and looking for money to finance a home improvement, pay off your current mortgage, supplement your retirement income, or pay for healthcare – you may be considering a reverse mortgage.

In a “regular” mortgage, you make monthly payments to the lender. In a “reverse” mortgage, you receive money from the lender, and generally don’t have to pay it back for as long as you live in your home.

The loan is repaid when you die, sell your home, or when your home is no longer your primary residence. The proceeds of a reverse mortgage generally are tax-free, and many reverse mortgages have no income restrictions.

Reverse Mortgage: Your Third Option?

Until recently, there were two main ways to get cash from your home:

1. You could sell your home, but then you would have to move.

2. You could borrow against your home, but then you would have to make monthly loan repayments.

Now there is a third way of getting money from your home that does not require you to leave it or to make regular loan repayments. You may consider a Reverse Mortgage.

What is a “Reverse Mortgage?”

A “reverse” mortgage is a loan against your home that you do not have to pay back for as long as you live there. With a reverse mortgage, you can turn the value of your home into cash without having to move or to repay a loan each month.

The cash you get from a reverse mortgage can be paid to you as:

  • A single lump sum of cash;
  • A regular monthly cash advance;
  • A “creditline” account that lets you decide when and how much of your available cash is paid to you;
  • A combination of these payment methods.

No matter how this loan is paid out to you, you typically don’t have to pay anything back until you die, sell your home, or permanently move out of your home.

To be eligible for most reverse mortgages, you must own your home and be 62 years of age or older.

Questions to Consider?

1. Do you really need a reverse mortgage? What needs would be met by getting a reverse mortgage?

2. Can you afford a reverse mortgage? The younger you are when you take out a reverse mortgage; the more you will owe.

3. Can you afford to start using up your home equity now? The more you use now, the less you will have later when you may need it more, for example, to pay for future emergencies, health care needs, or everyday living expenses. This is especially so if your needs suddenly grow or your income does not keep pace with inflation. You may also need your equity to pay for future home repairs or a move to assisted living.

4. Do you have other options? Do you have other financial resources that you could use instead of taking out a loan? Have you seriously looked into the costs and benefits of selling your home and moving to a less expensive one?

5. Do you fully understand how these loans work? Reverse mortgages are quite different from any other loans. Before considering one, you need to do your homework carefully and thoroughly.