A Reverse Mortgage liquidates the equity you have in your home by paying you cash and eliminating your existing monthly mortgage payments. By refinancing your home with a Reverse Mortgage, you can ensure that you will live in your home free of mortgage payments as long as you continue to pay your homeownerâ€™s insurance and property taxes.
Reverse Mortgages have existed since the 1980s and are insured by the Federal Housing Administration. Designed to alleviate the financial burden of a retired lifestyle, Reverse Mortgages have helped preserve a quality of life for many people. To see if a Reverse Mortgage is right for you, contact one of our Loan Officers today.
A Reverse Purchase allows retirees and eligible borrowers over the age of 62 to partially finance the purchase of a new home. A Reverse Purchase works just like a Reverse Refinance by liquidating the equity that a potential borrower would establish with the purchase of a new home through the down payment.
Bob and Sue are buying a $300,000 home but only have $200,000 to put down at closing. They are able to finance the remaining $100,000 by doing a Reverse Purchase that will liquidate the $200,000 equity they use to buy the home.
Using Your Funds
There are no restrictions on how you can use the proceeds that will come from your reverse mortgage. Here are some examples:
- Pay off your current mortgage obligations
- Pay for a home improvement or repair project
- Provide supplemental retirement income
- Pay for healthcare or medical expenses
- Help with taxes and insurance
- Reduce your other debt obligations
- Purchase a second home
- Invest for your long term needs
Misconception #1: â€œI could lose my home.â€
Truth: As long as you continue to make your property tax and insurance payments, your home belongs to you. Even if the equity is used up during the lifetime of the Reverse Mortgage, your home is yours.
Misconception #2: â€œI have to own my home â€˜free and clear.'â€
Truth: If you have a current mortgage, the Reverse program can pay off that lien and still give you cash from your equity.
Misconception #3: â€œI wonâ€™t leave anything to my family.â€
Truth: The amount of equity depleted monthly from an average Reverse Mortgage is usually less than the monthly cost of a retirement home, helping you potentially leave more for your family.
Misconception #4: â€œI canâ€™t afford the closing costs.â€
Truth: Closing costs can be rolled into the loan on Reverse Mortgage refinances, resulting in nothing â€œout of pocketâ€ for you. Closing costs are also very regulated, resulting in comparable fees to â€œforwardâ€ mortgage transactions â€“ so for Reverse Purchases it would cost you roughly the same amount.