Have you heard about reverse mortgages? Maybe in a television ad, with silver-haired seniors or aging actors who are under qualified to give you home or financial planning advice? Well, let us explain it to you from the perspective of real estate experts who are qualified to help. A reverse mortgage is a home equity loan of sorts. Also referred to as home equity conversion mortgage (or HECM), a reverse mortgage is when a bank makes payments to you based on your accumulated home equity. There is no monthly payment on your part, because the loan is repaid when you sell the home, permanently move, or die. Your loan amount is based on age, the value of your home, and your interest rate. The amount you can receive was increased under The American Recovery and Reinvestment Act of 2009 (the Stimulus package signed into law under President Obama) from $417,000 to $625,500, which allows many seniors in higher-priced homes to now be eligible for significantly more money.
To qualify, you must meet certain requirements. Your home must already be paid in full, or have a mortgage balance low enough to be paid in full with the money received from your reverse mortgage. The home must be your primary residence. Also, the method in which you receive payment from your reverse mortgage will depend on the type of mortgage you already have. Those with adjustable rates have more flexibility and can choose between a lump sum, line of credit, set monthly payment, or a combination. Fixed-rate mortgage holders get a lump sum.
A reverse mortgage can offer older homeowners some financial advantages. The money can be used for anything – improved cash flow, home improvements, health care expenses, anything you might need extra cash to cover. And the best part is that you can never owe more than your home is worth. (Also, if the reverse mortgage balance is lower than the cost of the home at repayment, you and/or your heirs keep the difference!) Call today to speak with one of our experts (rather than base such an important decision on the lines spoken by a mostly-retired actor on TV), and we’ll help you decide whether a reverse mortgage is right for you!