A Reverse Mortgage is becoming an increasingly popular and versatile financial planning tool for seniors. Today’s Reverse Mortgage alternatives allow homeowners to access the equity they have built in their homes to supplement their retirement income, retire a traditional mortgage and relieve themselves of the burden of a mortgage payment, provide a future source of cash for a surviving spouse, buy that second home they always dreamed of, make needed home improvements or as another alternative source of cash rather than depleting their retirement funds. Whether you need the funds today or wish to plan for the future, reverse mortgages can be a part of your financial retirement plan.
A Home Equity Conversion Mortgage (HECM), more commonly known as a Reverse Mortgage Loan, allows you to access the equity you’ve built in your home without having to sell it. The Home Equity Conversion Loan is insured by the government via the Federal Housing Administration (FHA). The most unique feature of this government insured loan is that you never have to make a monthly mortgage payment. You can use the funds you receive as you wish: to supplement your retirement income, make home improvements, pay bills, or buy a new or second home. It’s all up to you. The loan is repaid only when you sell your home or it is no longer your principal residence.
If you’re a homeowner 62 years or older with sufficient equity in your home you may qualify.
Here are answers to common questions about Reverse Mortgages:
What is the difference between a reverse mortgage and a home equity loan?
With a traditional mortgage or home equity line of credit, you must meet minimum income and credit requirements to quality for the loan, and you have to make monthly loan payments. With a reverse mortgage, you will need to demonstrate the ability to pay the customary expenses related to owning a home such as property taxes, insurance and maintenance, however there is no credit score requirement.
Do I have to repay a reverse mortgage loan?
Eventually the loan does need to be repaid. However, your payment is not due on your reverse mortgage loan as long as it is your primary residence and you continue to pay required property taxes and insurance, and you maintain it according to FHA requirements.
Do I still own my home with a reverse mortgage?
Absolutely. With the Reverse Mortgage, you maintain the title to the property in your name. You own and can remain in your home as long as you meet all the reverse mortgage requirements. You cannot lose your home under normal circumstances, but please understand that you must continue to pay your taxes and insurance and otherwise comply with the loan terms to avoid the possibility of foreclosure.
Are there any restrictions on how I use the money I receive?
No. You can use the money from your reverse mortgage loan any way you like. Many people put the proceeds into a line of credit account for home repairs or in case of unexpected expenses. Others use it to pay for in-home health care, medical costs or property taxes. You can even use it for a vacation, a second home or to help your grandchildren pay their college expenses. Use it however you want – it is your money!
Do I need to own my home outright to qualify?
You can get a Reverse Mortgage if you either own your home outright, or currently have an existing mortgage or home equity loan. You may use your reverse mortgage proceeds to pay off an existing mortgage or home equity loan as well as access any additional funds that may, subject to program limitations, be available to you.
Standard Bank Reverse Mortgages are guaranteed by the US Dept. of Housing and Urban Development and insured by the Federal Housing Administration. These materials are not from HUD or FHA and were not approved by HUD or a government agency.