Is a Reverse Mortgage Loan for YOU?

Millions of Americans have been able to attain a reverse mortgage to help meet their financial needs.
We can help you get in contact with a reverse mortgage counselor who will give you important information to help you decide whether a reverse mortgage loan is right for you.

How much can you qualify for?

If you’re worried about paying your bills in your retirement years, a reverse mortgage could be an option. Discover if a reverse mortgage is right for you!

About Us

At ReverseMortgage-Guidance.com, we specialize in putting you in contact with our partners who can help offer guidance and solutions for individuals considering a reverse mortgage. Please contact us below with any questions you may have.

What Is A Reverse Mortgage And How Does It Work?

A reverse mortgage is a loan that allows homeowners – most often those 62 or older – to borrow against a portion of the equity in their home. A reverse mortgage works differently than a traditional mortgage loan, though. Instead of making payments to your lender, your lender will make a payment to you.

The loan first pays off your existing mortgage, if you have one, and then you can often use the remaining funds for anything you’d like. You must continue to pay property taxes and homeowners insurance, and you’re responsible for maintaining the home.

Reverse mortgage loans are designed for older homeowners who may have retired and want to eliminate their monthly mortgage payments or supplement their income.

When you take out a reverse mortgage, the lender pays you based on a percentage of your home’s value. The amount you can borrow depends on your age, the value of your home, and current interest rates. You don’t have to repay the loan until you sell the house, move out permanently, or pass away. At that point, the loan balance, including interest and fees, becomes due.

With a reverse mortgage, you borrow against your home’s equity, which is the difference between what you owe on your mortgage and what your home is currently worth.

To determine how much money you can receive from a reverse mortgage, your lender will order an appraisal of your home. Suppose your home is worth $350,000 and you owe $100,000 on your mortgage. In this scenario, you have $250,000 worth of equity. Most lenders wouldn’t allow you to borrow the full $250,000 with a reverse mortgage, but you could borrow a percentage of that amount. This leaves you with some equity still in the home.

It’s important to understand what happens once you have a reverse mortgage.

Reverse Mortgage Eligibility Requirements

Advantages & Disadvantages of a Reverse Mortgage

You must be at least 62 years of age.
You can only get a reverse mortgage on your primary residence, not a second residence or vacation home.
To take out a home equity conversion mortgage (HECM), the U.S. Department of Housing and Urban Development (HUD) requires that you attend a reverse mortgage counseling session.
You’ll be required to undergo a financial assessment to ensure you can meet the financial obligations of the loan.
You can’t owe federal debt, such as student loans or income tax.
The real estate property must meet required property standards.

Advantages Of A Reverse Mortgage:

While the pros of a reverse mortgage have already been listed in the table above, here’s a more detailed explanation of each:
You’re able to stay in your home. Reverse mortgages will eliminate your monthly mortgage payment and provide you with an extra income stream. This might offer enough financial relief to make staying in your home more affordable.
You won’t need to pay taxes on your funds. The IRS doesn’t treat any funds you receive from a reverse mortgage as income. As a result, this money isn’t taxable.
Surviving family members have options with your estate. When the time comes for surviving family members to take over your financial responsibilities, they have plenty of options for dealing with loan repayment.
You’ll be more financially secure in retirement. A reverse mortgage provides more money to use for other expenses since you’ll no longer have a monthly mortgage payment.
You’re accessing existing equity. You can access your existing equity, which can be a significant amount if you’ve been in the home for a long time.

Disadvantages Of A Reverse Mortgage:

While the cons of a reverse mortgage have, like the pros, already been listed in the table further up, here’s a more detailed explanation of each:
You’ll see a decrease in equity. Remember, you’re borrowing from the equity in your home. This means your heirs will inherit less or you’ll reap a smaller profit if you decide to sell.
It could impact how you qualify for other retirement benefits. Since a reverse mortgage can affect certain need-based assistance programs, be aware of how it could impact your eligibility for Medicaid and other retirement benefits.
Your heirs could encounter complications. As with any financial responsibilities after losing a family member, your heirs could face a larger repayment amount than you anticipated.
You’ll have to pay various fees. Borrowers will still need to pay some fees with their reverse mortgage. These typically include origination fees, closing costs and servicing fees.
Reverse mortgage scams are common. Older homeowners are a frequent target of reverse mortgage scammers. Insist that reverse mortgage lenders explain the loan conditions plainly. Also, ensure these conditions aren’t too good to be true.

What Are the Risks of a Reverse Mortgage?

While a reverse mortgage can be a valuable financial tool, there are also risks associated with this type of loan. One of the biggest risks is that the loan balance will increase over time, reducing the equity in the home and potentially leaving less for the borrower’s heirs. Another risk is that the upfront costs associated with a reverse mortgage can be more than a traditional home loan. These costs may include origination fees, mortgage insurance premiums, and appraisal fees. These costs will be added to the loan balance, and interest will be charged on the total amount. Finally, borrowers must continue to meet their obligations, such as paying property taxes and homeowner’s insurance, or risk defaulting on the loan. If the borrower defaults on the loan, the lender may foreclose on the home.

How Much Can I Borrow with a Reverse Mortgage?

The amount you can borrow depends on several factors:

– Your age (older borrowers may have access to more funds).

– The value of your home.

– Current interest rates.

– The type of reverse mortgage you choose.

What Are the Costs Associated with a Reverse Mortgage?

Reverse mortgages come with several costs, including:

– Origination fees.

– Mortgage insurance premiums (for HECMs).

– Closing costs.

– Servicing fees.

– Interest.

These costs can be financed into the loan, meaning they will be deducted from the loan proceeds.

Will I Still Own My Home with a Reverse Mortgage?

Yes, you retain ownership of your home with a reverse mortgage. You are still responsible for property taxes, homeowner’s insurance, and maintenance. Failing to meet these obligations can result in the loan becoming due and payable.

What Happens If I Outlive the Loan Proceeds?

If you outlive the loan proceeds, you won’t be required to move out of your home. You can continue to live in your home, but you will no longer receive monthly payments. However, you may still access any unused portion of a line of credit if you chose that disbursement option.

Where Can I Get More Information About Reverse Mortgages?

For more detailed reverse mortgage information and a customized quote package, consider speaking with a local lender or contacting a HUD-approved counseling agency. They can provide guidance tailored to your specific situation and help you make an informed decision.