Five Things Every Senior Should Know About Reverse Mortgages

May 28, 2011

A summarized reverse mortgage guide

For many seniors, their home represents their largest remaining retirement asset. Unfortunately, many feel that the equity built in their home over a lifetime is impossible to access unless the property is sold. Perhaps the home where they raised their family is simply no longer appropriate to their current lifestyle, but alternatives don’t seem readily available.

Regardless of credit history
and with NO income or asset verification, you can…

1. Purchase a home with a current fixed rate as low as 4.5% … AND have no mortgage payment for life or ever be upside-down on your mortgage obligation regardless of the market using a reverse mortgage purchase.

Buy a home without paying cash for the entire purchase price

· Qualify with NO verification of their income and credit history – as long as they are able to afford the insurance and property taxes for their new home. The only qualifying criteria are age and equity – their age will determine the required down payment amount.

· The reverse mortgage rate can be fixed for the life of the reverse mortgage loan, and the loan has no pre-payment penalty. You can use a reverse mortgage simply as a no document style loan in order to purchase a home and make payments in order to maintain their equity position if they wish. As with any HUD-backed loan, any equity in the property is yours and can be passed on to your children or heirs. The reverse mortgage lender only will give your heirs 6 months to sell or refinance the home if you pass away.

2. Many seniors find that as they age:

· They would like to live closer to children who have moved to a different area

· The layout of the home may no longer be appropriate

· They may need to split equity in the home on sale with an ex-spouse as divorce among seniors has increased dramatically over the last several years

3. Many seniors’ retirement dreams include keeping a current home near friends they have known for years and also having a second home in a different area closer to children who have moved or in a warmer climate away from winter snows. Unfortunately for most, the economic downturn has made this dream seem no longer a possibility. One reverse mortgage option allows seniors to withdraw some of the equity from their current home which can be used to purchase a second home. No mortgage payments are ever due on the loan and the second home owned free and clear is not subject to any interest accrued on the reverse mortgage.

4. Sell your existing home and use only some of the cash to purchase a new home, and still not have a mortgage payment.

5. As more housing inventory enters the market, prices particularly on distressed properties will continue to fall. Homes with deferred maintenance or outdated kitchens and bathrooms will demand less money and sit on the market for longer. This delay can not only costs thousands in uncaptured market values, but can cause significant stress as the home can stagnate on the market in spite of price cuts. Unfortunately, many senior homeowners don’t have funds to draw from for any home improvements making it impossible to do any needed updates.

Saver closing costs are much lower than a typical reverse mortgage

· Money from a reverse mortgage is non-taxable and won’t impact your qualification for Medicare or other senior assistance programs.

· Available funds can increase annually as you live in your home

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