| |
|
 |
What is a Reverse Mortgage?
The easy way to think of a Reverse Mortgage is that it is the “opposite” of a traditional mortgage.
With a traditional mortgage, you borrow money and make monthly payments back to the lender. As you make payments, the balance of your loan declines while your equity in the property increases.
With a Reverse Mortgage, the lender pays you each month and the loan balance increases while the equity declines. You are using the equity in your home to supplement your income.
It enables homeowners aged 62 and over to convert part of their equity into tax-free* income without having to sell their primary residence home, give up title to their home, or take on a new monthly mortgage payment.
You do not make monthly payments; the loan is repaid when you permanently leave or sell your home.
*Please consult with a financial or tax advisor for specifics.
|
|
What are the features and benefits of a Reverse Mortgage?
In a nutshell, some of the main features and benefits are provided below. For the best answers and advice, please contact one of our Reverse Mortgage Advisors.
-
The home must be your primary residence
-
Borrowers retain ownership/title and occupancy of the home
- Homeowners must be over age 62
-
Repayment isn't made until the home is sold or the last borrower permanently moves out or passes away
-
There are no monthly mortgage payments
-
There are no restrictions on how you can use the money
-
There are no income, medical, or credit qualifications
-
Funds are tax-free* for as long as you live in your home
-
The Reverse Mortgage does not affect Social Security or Medicare eligibility
-
When the loan is due, heirs have choices--they can repay the loan and keep the house or sell the home and repay the loan; it is a non-recourse loan with no additional loan debt being owed by heirs
*Please consult with a financial or tax advisor for specifics
|
|
How can I use the money I receive from a Reverse Mortgage?
The money is yours to use as you choose. Possible uses include:
-
A financial “cushion” to provide for unexpected expenses
-
Medical expenses and prescriptions
-
Leisure and travel
-
Establish a financial resource to assist loved ones with things such as educational expenses, a down payment on a home, and more
-
Pay for home repairs and modifications
-
General day-to-day expenses such as food, gas
-
Purchase a vehicle, boat, or second home
-
Pay off debts
-
Financial planning tool to purchase annuities or long-term care insurance
-
Housing expenses such as upkeep, utilities, taxes, and insurance
-
. . .and more!
|
|
What types of properties are eligible for Reverse Mortgages?
The property must be owner-occupied and the following types or homes are eligible:
|
|
How much money can I get with a Reverse Mortgage?
Different factors are used to determine how much money you can receive:
Your Reverse Mortgage Specialist will work with you to determine your needs and help you to choose the right program. It’s important to keep in mind that everyone will have a different situation, but a general rule of thumb is that the older you are and the more your home is appraised for, the more money you will qualify for.
|
|
Who should be involved in my decision to obtain a Reverse Mortgage?
As with any major financial decision, it is important for you to talk with people you trust. If you have a financial advisor or attorney with whom you discuss important financial matters or a trusted friend or family member who helps you make decisions, involve them in the discussion.
Mount Vernon’s Reverse Mortgage Advisors are always happy to meet with you and your advisors to discuss your Reverse Mortgage options. This is an important decision involving your home and your financial future and we want you to feel comfortable with the choices you make.
|
| What costs are involved with a Reverse Mortgage?
There are different types of Reverse Mortgage programs and the costs will vary from one loan to another. With most options, you will see costs that are similar to traditional mortgage programs, including origination fees, interest charges, inspection fees, closing costs, and insurance.
|
| Do I retain the title to my home when I have a Reverse Mortgage?
Yes! Your name will remain on the title. Like a traditional mortgage, a Reverse Mortgage is a lien.
|
|
What types of payment will I receive with a Reverse Mortgage?
Depending on the type of loan you choose, you can receive the funds from your Reverse Mortgage in a variety of ways—as a lump sum, in fixed monthly payments, as a line of credit, or in a combination of these methods. Your Reverse Mortgage Advisor will explain what options are available to you.
|
|
When do I pay back a Reverse Mortgage?
The Reverse Mortgage does not need to be repaid until the owner/last-remaining owner either passes away, sells the home, or vacates the home for one full year. Even then, there are options available for the borrowers and their family members:
- Pay off the Reverse Mortgage principal, interest, and fees
- Keep the home in the family by taking out a traditional mortgage or by using other assets to pay for it
- Sell the home to repay the loan
A Reverse Mortgage is a non-recourse loan. The borrowers will never have to repay more than the current market value of the home at the time of repayment or sale—even if the home has depreciated in value during the time that the Reverse Mortgage was in effect.
If there is money left over after the Reverse Mortgage has been repaid, it will go to the homeowners or to the homeowners’ estate to be used according to their wishes.
|
|
What are my responsibilities if I have a Reverse Mortgage?
You remain a homeowner and still have the typical responsibilities associated with owning your home
-
Payment of real estate taxes
-
Payment of homeowner’s/hazard insurance
-
Property maintenance and repairs
|
