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The Reverse Mortgage at a Glance
You may be asking yourself “now why would I need
another mortgage at my age?” It is the “Reverse”
part that many people, young and mature alike do
not yet understand. Below you will find a
typical senior household represented by a bar
chart. The senior is on a fixed income,
either with a conventional mortgage or no
mortgage at all. In this case, there is no
mortgage at all.
There may be many reasons why a senior would
need to increase their retirement income. Most
seniors take a reverse mortgage to prepare for
any unexpected emergencies that may occur
in their retirement or even have the extra cash
on hand to deal with family financial
complication. Many seniors also need the extra
money to pay off an existing mortgage to
prevent foreclosure, pay off credit card
debts, day to day living expenses, home repairs,
etc. There are a multitude of reasons why a
senior decides to take part in this unique
federally approved and insured program.
This next graph depicts a senior household with
a reverse mortgage. As you can see, home equity
is used and your tax free cash available is
increased. At the same time your reverse
mortgage debt is increased. This may seem very
similar to a home equity loan, but there are
very different properties to the reverse
mortgage that makes it an ideal situation for
seniors, please read on to find out why and how
this senior loan works.
How
the Reverse Mortgage Works
1.)
First, your home is appraised by a federally
certified FHA home appraiser and then an FHA
value is placed on the home. Secondly, your age
combined with the value of the home and the
current reverse mortgage interest rate determine
how much money you will be eligible to receive.
The primary driver is age however, the older you
are the more money you will be able to receive.
Thirdly, credit scores and income levels do not
affect your eligibility in receiving the reverse
mortgage.
2.)
Next, once the amount of money you can receive
is determined you have several options to obtain
the money either as a lump sum, line of credit,
or monthly payments or a combination according
to your preference. The bank makes its money on
interest charged only when money is used
by you. Therefore, the money that is left in
the bank accumulates growth over time. All
costs associated with obtaining the reverse
mortgage are paid off at closing, and money from
the reverse mortgage is used to pay off the
fees. In essence, there are no out of pocket
expenses. You make absolutely no payments on
the reverse mortgage in your lifetime unless you
move or permanently leave your home. The bank
cannot demand any sort of re-payment as long as
you live in your home.
3.)
Finally, this loan is considered non-recourse,
which means you will never have to pay back the
bank more than what the home is worth.
Re-payment is only due just after the passing on
of the surviving spouse. If there is money
left over, it is given to your heirs as a
legacy. If you are blessed with a long life
and your reverse mortgage funds eventually
become exhausted, then you have the option to
refinance your reverse mortgage to obtain more
money. You can also refinance your reverse
mortgage during your lifetime to obtain more
money as well. Your heirs or assigned party
will usually sell the home (most common) after
your passing to re-pay the reverse mortgage or
can refinance to a conventional mortgage to keep
the home if they like. We also have found from
experience that once your heirs and family are
thoroughly educated to this program, they are
usually in favor of it.
Most importantly, the bank will never take your
home at anytime unless you yourself fail to pay
property taxes or mortgage insurance which can
be paid for by reverse mortgage proceeds.
The reverse mortgage has been approved and is
insured by the federal government. To this
date, more than 350,000 seniors have taken part
in this unique life-changing program to improve
their quality of life.
We at the Senior Trust Program make it our
practice to have the family involved in this
decision. If you have any questions please call
us and we will offer free consultation at your
home where you are comfortable.
Questions about how a reverse mortgage can
improve your financial situation?
Give us a call at 978-688-2480 ext. 31
Toll Free Reverse
Mortgage Hotline: (800) 662-2480 ext. 70
(after
hours 7 days a week, prompt response)
Professional answers from professional
specialists
Our specialists are seniors themselves who can
relate to fellow seniors
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