Sound too good to be true? It’s not. It’s a Reverse Mortgage, a unique type of FHA mortgage product designed for seniors aged 62 and up.
Over the years, reverse mortgages have developed somewhat of a bad rap. But, there has
been a significant amount of reform to the program, and it offers tremendous advantages to certain older adults under the right circumstances.
What exactly is a reverse mortgage?
Essentially, it’s a mortgage that enables a borrower to tap into the equity in their home. It can be used to extract a lump sum of cash, or take monthly payments (yes, I said “take” and not “make!”). Unlike a home equity loan, with a reverse mortgage, there is no monthly repayment. The only required payments are property taxes and homeowner’s insurance, until such time as the home is no longer a principal residence.
The loan does not have to be repaid until the last borrower permanently leaves or sells the home. If the house is sold, the loan is repaid along with the accrued interest. The owner and/or the heirs keep any remaining proceeds. If for some reason the outstanding balance of the loan is more than the house is worth when it is sold, the balance of the debt is forgiven. There is no recourse to the owner or to the estate.
The money from a reverse mortgage can be utilized in a variety of ways: from covering monthly living expenses to fulfilling life long dreams. The money is available as a lump sum, monthly income, a line of credit, or any combination of these.
What are the qualifications?
The youngest borrower must be age 62 or older, and use the home as a principal residence. That’s it! No income or debt qualifying, no credit score issues. The home must meet HUD guidelines and minimum property standards.
Reverse mortgages can also be used to move up (or down) to a new property. It’s an ideal financing solution for a senior who would like to trade up from a home that’s too large, perhaps to one on a single story, or with less maintenance, but who cannot make the monthly payments.
Interested in whether or not a reverse mortgage may be a solution for you (or a parent or friend)? Email us at concierge@lizmoore.com, or click below, and we'll be happy to connect you with someone who specializes in this product!
