Introduction to Reverse Mortgages
A Reverse Mortgage is a loan available to seniors over the age of 62 which allows them access to some of the equity they have in their home into either cash, a monthly payment or a growing line of credit. These loans were created to help older homeowners Age In Place and give the ability to spend down one of their largest assets, their home, without having to sell the home and move or take on burdensome monthly mortgage payments.
The most common Reverse Mortgage today is the Home Equity Conversion Mortgage - created by The Department of Housing and Urban Development (HUD) in 1987 and signed in to law by then President Ronald Reagan in 1988. Also available today are non FHA Reverse Mortgages referred to as either Proprietary or Jumbo Reverse Mortgages.
But, the Reverse Mortgage is a mortgage... what ever is borrowed will need to be paid back and just as with a conventional mortgage the bank will charge the borrower interest... but no payment is required until the homeowner decides to, or they sell the home, or they no longer live in the home as their primary residence such as when someone moves into a care facility and has been in that facility for 12 continuous months. If the last borrower or title holder are in the home when they pass away, the home will transfer to their heirs or estate and the loan will be repaid - usually by the sale of the home with any remaining equity belonging to the heirs or how ever has been established int he homeowner's Will or Trust. HUD will allow the heirs up to 6 months to make repayment, and if that is not enough time then they can ask for and be granted up to two additional 3 month extensions.
What are the pros of a reverse mortgage?
Number one is simply being able to access some of the investment that has been created in your home. For those currently dealing with making a monthly mortgage payment, relieving themselves from the obligation of that monthly payment can free up enough cash flow to simply continue to live in their own home. Other uses include making home improvements, either to make the home more mobility friendly or to finally get that dream kitchen or workshop, paying off credit card or medical debt, purchasing a vacation home or a home for a child, travel while you are still physically able, and some, well others choose to begin their gifting today to their church or favorite charity. And then others use this financial tool to create a growing line of credit to be used at some point in the future or to help balance the ups and downs of sequence of returns risk within their investment portfolio... and the list goes on... including the use of the Reverse Mortgage to buy your next home!
What are the cons of a reverse mortgage?
The number one negative of the Reverse Mortgage is that currently you must wait until at least one of the borrowers is age 62... other countries (the US is not alone in the use of Reverse Mortgages, at least 15 other developed nations offer this program) allow those age 60, or even as young as 55! But here in the Untied States the age of consent for the Reverse Mortgage is 62. The other major consideration is that this is a mortgage. If you are considering leaving your home to your heirs this is an important consideration - but - consider what your intent truly is for a moment. Do you want your children to actually have your house? For them all to live in? Probably not... you may though want to maximize the legacy that you can leave behind, which is understandable. We can show that in many instances that by using a Reverse Mortgage that not only we help extend income while you are alive, but increase your overall net worth so you an actually leave even more value to your heirs when you are gone!
How can we help you?
First and foremost we are hear to help you make an informed decision. And we will begin by listening to where you are currently financially, emotionally, health wise and more... and where you hope to be in the future... what your needs and goals are... Then and only then can we correctly and accurately guide you through the learning process. Which version you choose to use of the Reverse Mortgage is as important as your decision to use one in the first place. We will equip you with easy to understand printed information that you can read and review and we will go over your options, the various costs and their impact as well as make sure you know what your alternatives are. And, if the Reverse Mortgage is determined by you (and only you) to be the correct course of action, well then I put my 16 years of experience to work guiding you to the version that this the best fit for your specific situation, at the lowest cost, in the shortest amount of time.
At Ted Butler, the Voice of Reverse Mortgage, I can assist those in Orange County, CA to Bellevue, WA and find a solution to your financial needs.
I will help you move from opinion to knowledge, and then from knowledge to understanding so you can be confident that the solution you choose will be an educated one!
If you are located in California, please contact me at 949-440-1958.
If you are located in Washington, please contact me at 425-891-6644.