An Introduction to Reverse Mortgages

A Reverse Mortgage is a special loan designed for Seniors, aged 62 and older, that allows eligible homeowners to borrow money without having to make any payments until they sell or pass the home onto their estate. With a Reverse Mortgage, the Bank pays you versus you paying the Bank.

Reverse Mortgages differ from traditional home equity loans as you do not make any monthly mortgage payments for as long as you stay in the home.

The advantages Reverse Mortgages offer include:

• Remain independent - A Reverse Mortgage allows you have the money to stay in your home without relying on others for support.
• Stay in your home - A Reverse Mortgage allows you to remain in your home and retain homeownership.
• No monthly mortgage payments - You need not pay back the Reverse Mortgage loan nor make any monthly mortgage payments until you permanently move out of the home.
• Tax-free money - Because the money you receive from a Reverse Mortgage is not considered income, it is tax free and will not affect your Social Security or Medicare benefits.*
• Freedom and flexibility - The money you get from a reverse mortgage is yours to use in any way you choose.

There are three main Reverse Mortgage programs: the government insured HECM program, the government sponsored Home Keeper program, and the government regulated Cash Account program.

You can receive your money in one lump sum, monthly payments, or a credit line for you to use as you need it, or a combination of these payment plans.

You can use the money for anything you choose, from daily living expenses, home improvements, healthcare expenses, paying off existing debts, or enhancing your retirement years. For many people, the money provides security in case of  the unexpected.

Many Seniors take Reverse Mortgages on their primary homes to purchase second vacation homes.  It is your money and your choice.

Unlike traditional equity mortgages that are due when the term of the loan ends, your Reverse Mortgage will not become due, nor will you make any mortgage payments, until you permanently move out of the home.

Your Reverse Mortgage loan becomes due and must be paid in full when one of following conditions occurs:

• the last surviving borrower passes away or sells the home;
• all borrowers permanently move out of the home;
• the last surviving borrower fails to live in the home for 12 consecutive months;
• you fail to pay property taxes or insurance and do not correct the problem;
• you let the property deteriorate, beyond what is considered reasonable wear and tear, and do not correct the problems.

You or your heirs keep the net proceeds from the sale after the loan is paid.

To find out if a Reverse Mortgage is right for you, contact one of our Reverse Mortgage Specialists.

*Should you have any questions, contact your tax advisor.