Is A Reverse Mortgage Right For You?


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Reverse mortgages (also called "home equity conversion loans") give older homeowners the ability to use their home equity without selling their home. Choosing between a monthly payment, a line of credit, or a lump sum, you can take out a loan amount determined by your equity. Repayment isn't required until after the borrower sells the property, moves (such as to a care facility) or dies. You or an estate representative is required to pay back the reverse mortgage amount, interest, and other finance fees at the time your house is sold, or you are no longer living in it.

Who is Able to Participate?

A reverse mortgage is a unique tool designed for seniors 62 and older as an innovative financial planning strategy. Imagine enjoying monthly loan proceeds from the years you've invested in your home without the obligation of a monthly mortgage payment.

There are many benefits of a reverse mortgage but one of the most notable might be the pleasure of accessing part of the equity in your home and having the comfort of remaining in the home you have come to know and love for many years.

A reverse mortgage is available on primary residences and no repayment is due until the home is sold, or the last borrower passes away or permanently leaves the home. Because there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance each month.

Proceeds from a reverse mortgage are not subject to personal income taxation, but borrowers should seek tax advice on how proceeds may affect government needs-based programs such as Medicaid and Medi-Care. Borrowers must continue to keep the home in good condition, pay property taxes and continuing to pay homeowner's insurance to avoid the loan becoming due and payable.

One important factor to keep in mind is that the borrowers of a reverse mortgage retain ownership and title to their home. For homeowners taking advantage of a reverse mortgage who have been building up equity in their home for years, their home will remain theirs just as it was before.

Don't let the myth that reverse mortgages are too complex deter you from taking advantage of its valuable features. Reach out to me today for a free consultation!

North Star Mortgage and Realty is not a financial advisor. Consult your financial or tax professional for more information.

Give Denise a call at: 408-402-5936.

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