What is a Reverse Mortgage?
The reverse mortgage is a product developed by the federal government which allows
senior homeowners 62 years of age or more the opportunity to access the equity in
their home with no payments, income or credit qualifications.
Unlike a "traditional" mortgage where the loan principal and interest
are paid to the lender on a monthly basis, a reverse mortgage defers payments until
the maturity event (when the borrower sells the home or leaves the residence permanently).
It can provide the borrower with a lump sum of money, a line of credit, or a monthly
income stream.
Features of the Reverse Mortgage
- No repayment until home is sold or borrower permanently leaves residence
- Unlocks the equity built into home
- No income or credit qualifications
- Proceeds received as tax-free income
- Interest is paid at time loan is repaid – not during loan
- FHA Insured or Fannie Mae Guaranteed
- Flexible payment options
- Growth on credit line option
- Does not affect Social Security or Medicare benefits
Benefits of the Reverse Mortgage
Reverse mortgage borrowers may use the proceeds for whatever they wish:
- Pay off existing mortgage and credit card debt
- Hospital Care, Prescriptions / Health Care costs
- Afford Long Term Care Insurance
- Reduce burden on children
- Make needed home repairs
- Pay Property Taxes
- Free up cash for Daily Expenses
- Travel, Gifts, or something special
- Help grandchild with college expenses