A reverse mortgage allows homeowners aged 62 or older to convert part of their home equity into cash without selling their home or making monthly loan payments. Unlike a traditional mortgage, where you pay the lender monthly, a reverse mortgage pays you — as a lump sum, monthly installments, credit line or a combination of these options.
The loan becomes due when a triggering event occurs, such as when you sell the home, fail to pay property taxes or move out for a year or longer. Your heirs or estate have up to one year to sell or refinance the home to satisfy the loan balance, with any remaining equity going to your heirs.
Notably, reverse mortgages backed by the FHA include a non-recourse clause, meaning you or your heirs will never owe more than the home’s value, even if the loan balance exceeds it.
Funds received from a reverse mortgage are generally tax-free, as the IRS considers them loan proceeds instead of income.
A reverse mortgage offers several benefits, including financial flexibility and protection from negative equity. You can select this option for several reasons.
Reverse mortgages come in several forms, each with unique features to suit different needs. Consider how these three options might fit your financial goals.
As the name suggests, a home equity conversion mortgage lets you leverage your equity to pay your expenses with accessible, tax-free funds. HECMs are FHA-insured and available to homeowners 62 years or older. You can decide how you want to receive the money.
If you’re interested in buying a home to be closer to your loved ones or downsize into a lower-maintenance living space, a HECM for purchase affords you the flexibility to do so without monthly mortgage payments. Use the proceeds from selling your current home as your down payment and finance the remaining costs with your reverse mortgage finances.
Homeowners with higher-valued properties can access a jumbo reverse credit line. This non-government-insured reverse mortgage lets you borrow up to $4 million tax-free using your home’s equity, without incurring monthly mortgage payments.
It’s normal to have questions about where to start. The first step toward financial freedom starts with you. Call one of our expert lenders or fill out a form to schedule a consultation today.
You must meet the following criteria in addition to your age to be eligible for this type of reverse mortgage:
As with an HECM reverse mortgage, you must be 62 or older to qualify for an HECM for purchase. Additionally, you must occupy the home as your primary residence and pay property taxes, homeowners insurance and home maintenance costs.
In addition to financial flexibility, this type of reverse mortgage lets you decide how much to pay each month. It increases your purchasing power, lets you keep your retirement savings intact and enables you to own a home without overextending your budget.
Other benefits include:
You must meet the following criteria to qualify for this mortgage.
You may hesitate to apply for a reverse mortgage if you’ve heard misconceptions surrounding how the process works. Here are the realities behind these fallacies.
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When you’re ready to apply for a reverse mortgage, here’s what to expect.
Let Senior Lending Corporation demystify the process of obtaining your reverse mortgage. Our expert team offers specialized guidance from initial consultation to closing. Call us at 800-822-1190 or complete our online contact form to find out if you qualify today!
