REVERSE MORTGAGES... A GREAT FINANCIAL TOOL!
A Reverse Mortgage allows homeowners over the age of 62 to safely borrow against the home equity in their home.
More importantly, a reverse mortgage does not have to be repaid until you move out, sell your home, or pass away. At that time, your heirs or trustee estate has approximately 1 year to sell or refinance your home to pay off the balance and the remaining equity is distributed according to your will or living trust. Should your home sells for less than the balance owed on your reverse mortgage, the deficit is covered by the FHA mortgage insurance.
The funds that you borrow are tax-free, and you may use them any way you wish. You can receive your funds in a lump-sum, or monthly payment. You can even use these funds as a line-of-credit with an annual growth rate.
The federal government has instituted checks and balances to make sure the potential borrower has made an informed decision prior to obtaining a reverse mortgage. A borrower must receive reverse mortgage counseling with a HUD-approved reverse mortgage counselor. This safeguard ensures senior citizens against unscrupulous lenders.
Typically, a Reverse mortgage allows you to access from 55% to 60% of the value of your home. The specific amount is based upon the age of the youngest borrower, the value of your home, and the interest rate at the time you begin your reverse mortgage.