Reverse Mortgage Solutions –
A Great Financial Tool
What if, instead of making mortgage payments to your bank, they made payments to you instead? This may sound like a dream, but it actually isn’t. For certain people, such as retirees, who have equity in their home and who would like extra funds, reverse mortgage solutions may be the right financial tool to use.
Reverse mortgage solutions let homeowners access the equity in their home without needing to sell their home. As crazy as it sounds, in one of the solutions, your lender issues payments to you, based upon an approved amount of equity you are allowed to borrow. When you move, sell the home, or pass away, then the loan must be repaid.
Did you know another solution is to pay off an existing mortgage and you benefit from the relief of a non-mandatory principal and interest payment each month. A line of credit is another option and there are others.
Myths and Misconceptions about Reverse Mortgage Solutions
Unsure of the ins and outs of reverse mortgage solutions? Maybe it sounds a bit dodgy? Read about these common myths and misconceptions – and the reality.
Who owns the home in a reverse mortgage situation?
You – the borrower. You keep the title and ownership of your home with reverse mortgage solutions. Keep in mind that you need to live in the home, pay all taxes, insurance, and other expenses that you would normally have to pay without a reverse mortgage.
I already have a mortgage – can I still qualify for a reverse mortgage?
Yes. You can use the proceeds from your reverse mortgage to pay off your current mortgage. However… (keep reading!)
Do I have to repay the loan?
…at some point, you do. But you only have to repay your loan once you sell the home, move, or pass away or you reach your 150th birthday.
Do I need to make monthly mortgage payments?
Not for your reverse mortgage. You do not need to make mortgage payments on your reverse mortgage, but you may choose to make payments. If you still have a standard mortgage on your home, you continue to make those payments.
Are there any restrictions about how I use the money from my reverse mortgage?
Not at all! You can use the money for any reason – renovations, debt repayment, or even an around-the-world trip.
Wait – will I be taxed on the proceeds?
No. Your reverse mortgage is not considered income, so you don’t pay income tax on it. But to be on the safe side, you should check with a financial professional in case it affects your government benefits or other financial holdings.
The Facts about Reverse Mortgage Solutions
While you can get reverse mortgage solutions from a private lender, the Federal Housing Administration offers a Home Equity Conversion Mortgage (HECM), which is their reverse mortgage program. HECMs are available to seniors who have a certain amount of equity in their home to get access to cash when they need it. Shamrock Financial will guide you through the process.
A HECM is considered is a “non-recourse” loan, meaning that when the property is sold unlike a traditional mortgage with a reverse mortgage, you or your heirs will never pay more than either the remaining balance of the loan or the value of the house – whichever is less even if there is shortfall. But you or your heirs receive any equity beyond the loan payoff amount.
Of course, you need to meet certain requirements to get an HECM, such as:
- You must be at least 62 years old.
- You need to own your home and if you have a mortgage balance, that it is small enough that you could pay it off with your reverse mortgage.
- You must live in the home as your main residence.
How much you can get from HECM reverse mortgage solutions depends upon:
- The current mortgage rates.
- The lesser of: 1) appraised value of the home, 2) the HECM limit of $625,500, or 3) the sales price of the home up to $625,500.
- The age of the younger borrower or eligible or ineligible spouse who is not borrowing.
If you choose a fixed rate mortgage, you will get a lump sum at closing. If you select an adjustable rate mortgage, you get to choose from a number of options. Ask Shamrock Financial about these options.
HECM for Purchase
What happens when you want to access equity to buy a new home? You get an HECM for Purchase. This program lets people aged 62 or older to buy a new home using the proceeds from their reverse mortgage, all in one easy transaction. Reverse mortgage solutions like this one help retirees or elders to be able to move closer to family, improve their lifestyle or downsize.
Reverse Mortgage Solutions with Shamrock Financial
Accessing income as a senior can be a smart financial decision. If you have questions or want to get started with reverse mortgage solutions, Shamrock Financial can assist you. Come in today to discuss your options, and welcome to a new world of financial freedom.