REVERSE MORTGAGE
WHAT IS A REVERSE MORTGAGE
A Reverse Mortgage is a way for older adults to access the equity in their home to pay for the necessities or extras in life while allowing them to live in their home and maintain their independence.
HOME OWENRSHIP
One of the primary advantages of a Reverse Mortgage is that it allows you to continue to own and live in your home – even if one of the co-borrowers passes away. If you currently have a first or second mortgage on your home, you may still qualify.
ELIGIBILITY
To qualify for a Reverse Mortgage, you must:
- Be age 62 or older
- Own your home (houses and condos qualify; those with existing mortgages may also qualify)
- Live in your home
In addition, your home must:
- Be your principal residence
- Meet U.S. Department of Housing and Urban Development (HUD) minimum property standards
REPAYMENT
A reverse mortgage loan does not have to be repaid until the last borrower permanently leaves or sells the home. If the house is sold, the loan is repaid along with the accrued interest. You or your heirs keep any remaining money. Or, you or your heirs repay the loan at any time using other assets and keep the home free and clear.
USE OF PROCEEDS
You can use the money from your Reverse Mortgage in a variety of ways – from covering monthly living expenses to fulfilling life-long dreams.
RECEIVING THE MONEY
Borrowers can receive the cash from a Reverse Mortgage in several ways:
- Lump Sum
- Monthly cash advance
- Line of credit
- Or a combination of these options
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Important Facts
FACT: The bank will NOT own your home – With a Reverse Mortgage, you retain ownership of your home and can continue to live in it as long as your want. When the home is sold, the funds you’ve taken, plus interest, are repaid. If there is any remaining equity, it goes to you or your heirs.
FACT: You do NOT need to make monthly mortgage payments – With a Reverse Mortgage, there is no required monthly mortgage payments while you live in the home. If you have an existing mortgage, the proceeds from your Reverse Mortgage will be used to pay this off first, eliminating these monthly expenses
FACT: There is NO income qualification – Because you do not need to make monthly payments on a Reverse Mortgage, your current income is not a factor in your eligibility.
FACT: Your Social Security and Medicare benefits will generally NOT be affected – The funds from a Reverse Mortgage usually do not affect regular Social Security or Medicare benefits. However, need-based benefits, such as Medicaid and Supplemental Security Income (SSI), may be impacted. Contact a tax professional about your particular situation. |
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