The first step to finding out if a reverse mortgage is right for you is to understand what we mean when we say “reverse mortgage.” Put simply, a reverse mortgage is a government-insured loan. More specifically, a reverse mortgage or a Home Equity Conversion Mortgage (HECM), is a financial tool that allows homeowners 62 and older to access the equity in their homes. This equity is converted into tax-free money* that can be spent on anything, allowing you to live more comfortably and have a better retirement. To qualify for a reverse mortgage both spouses must be at least 62 years old, and the homeowners of a primary residence that has sufficient equity.
A reverse mortgage is distinct from a conventional or second mortgage in that reverse mortgages do not require the monthly payments** that a conventional mortgage demands of its borrowers in order to pay back a loan. Additionally, reverse mortgages do not have credit score requirements that must be met by borrowers in order to be eligible for a loan because the equity in your home is not considered taxable income. As the homeowner you will continue to be responsible for paying property taxes, property insurance, and maintaining the upkeep of the home.
It is possible to receive a reverse mortgage loan even if you already have an existing mortgage. If you qualify for a reverse mortgage this will mean that the funds you receive from the reverse mortgage will first pay off the current mortgage, making the remaining funds available for anything you need.
So what exactly can you do with a reverse mortgage loan?
What’s great about a reverse mortgage is that it gives the borrower the independence to spend their funds any way they like without limitation, which may include:
1. Pay off existing mortgage while continuing to live in the home you love
2. Pay monthly bills
3. Pay for medical costs
4. Engage in home improvement projects
6. Delay accessing Social Security in order to qualify for maximum benefits***
7. Make the most of your retirement
In addition to the reverse mortgage loan, there is a program known as the Reverse for Purchase Program. This program allows seniors to purchase or build a home with a reverse mortgage without having to make any monthly payments as long as you live in the home. Many seniors take advantage of the reverse for purchase option to move closer to family, downsize on a home to meet physical needs, or move to a more desirable location for retirement.
Seniors from a wide spectrum of income levels have chosen to manage their finances with a reverse mortgage because a reverse mortgage is not designed for one particular person but rather any senior looking to live a better retirement. If you or a loved one are a homeowner over the age of 62 and are interested in a reverse mortgage, our team of licensed experts at One Reverse Mortgage would be happy to answer any of your questions and guide you through the next steps to determine whether you qualify for a reverse mortgage loan.
*Please consult with your financial advisor.
**Homeowner is still responsible for taxes, insurance, and property maintenance.
***May affect SSI or Medicaid. Please consult with your financial advisor.