A reverse mortgage loan is not something that is on every 20-year-old college student’s radar. However, after interning for One Reverse Mortgage this summer, I have learned a great deal about our program. Here’s why I recommended the program to my grandparents.
A reverse mortgage is a loan. The only difference between a reverse mortgage and a conventional mortgage is that the reverse mortgage program is only available to senior homeowners 62 and older and that with a reverse mortgage you receive your money now, rather than later. The loan is paid off once the last borrower leaves the home. At this time, the loan can be repaid by selling the home or through a refinance. (More: What costs can I expect with a reverse mortgage loan?)
Pay off your existing mortgage
If there is currently a mortgage on your property this will be the first thing that gets paid off with a reverse mortgage. Even if all of the funds you receive from the loan are used to pay off your existing mortgage this is a huge accomplishment that can give you peace of mind as a homeowner to know you will no longer be making monthly mortgage payments*.
If you own your home free and clear, a reverse mortgage can alleviate other expenses and make your lifestyle more comfortable. If you do not need to use the funds to pay off an existing mortgage, it is up to YOU to determine how you would like to use your loan money.
Purchase a new home
For seniors who want to move closer to their grandchildren, downsize, or move to a more desirable location in retirement, you can do so with a reverse mortgage. This is known as the reverse for purchase, or HECM for purchase option. This loan option allows home owners to access the equity in their current home, then use these funds towards the purchase of a new home. With a reverse for purchase you can eliminate a monthly mortgage payment on a new home and purchase that home under one closing. (More: Reverse for purchase breakdown)
Improve your life
A reverse mortgage can benefit anyone looking to live a more affordable and comfortable life. The program is unique in that it is tailored to your lifestyle needs. Seniors who want to have the luxury of traveling in retirement use a reverse mortgage to fund their vacations. Baby boomers can use the loan as an emergency savings fund using our line of credit option. Grandparents can use a reverse mortgage to move closer to their children and grandchildren or simply to allow more frequent visits across the country to visit friends and family.
A reverse mortgage is a financial tool that can truly improve your life. When you call a One Reverse Mortgage licensed expert you will be asked about your lifestyle needs and retirement goals in order to determine whether the reverse mortgage program is right for you as well as which loan option will best meet your needs.
*Homeowner is still responsible for taxes, insurance, and property maintenance.