Your Guide to Reverse Mortgages

Your Guide to Reverse Mortgages

What’s a Reverse Mortgage?

A reverse mortgage is an available loan to homeowners that are 62 years or older, and it allows them to turn parts of the equity in their homes into cash. This process was conceived to help homeowners with limited income manage the accumulated wealth in their homes and to cover their monthly living expenses and pay for health care.

Where Did the Name Come From?

We call this particular loan a “reverse mortgage” because the lender is making payments to the borrower, instead of the borrower making monthly payments to a lender.

Features of Reverse Mortgages

With a reverse mortgage, the borrowers always has title and ownership over their home. At no point does the lender own the home, even after the last surviving spouse vacates the property. Below are some additional features of a reverse mortgage:

  • The borrower only needs to pay back the loan once the home is sold or otherwise vacated.
  • As long as the borrower is living in the home, they’re not required to make any monthly payments to the loan balance.
  • The borrower has to remain current on property taxes, homeowners insurance, and homeowners association dues (if necessary).
  • During the first 12 months post-closing, there’s a specific limit on the amount of funds a borrower can access. In example, if a borrower becomes eligible for a $100,000 loan, no more than 60 percent or $60,000 can be accessed.

Advice for Children of Seniors

The majority of seniors in America have their wealth in their home equity, according to the Reverse Mortgage Association. If your parents are having a difficult time meeting their monthly expenses, utilizing that equity may be a recommended solution. A reverse mortgage is a product that will do exactly that.*

Whether or not a reverse mortgage is the most efficient financial option for your parents, it’s a very personal and thoughtful decision. You may want to ask all of your questions to a home loaner specialist to receive correct answers and advice before making a big decision like this.

*It’s important to note that the amount of proceeds you can receive depends entirely on the current value of your home, your age, and your interest rates.

For more information on reverse mortgages, contact Becky Smith at (760) 737-3000.

2018-10-10T10:45:15+00:00