Reverse mortgages are designed to help retired adults and/or senior citizens use the equity in their home in order to supplement their retirement needs. These mortgages allow older adults to take cash to use for any worthwhile purposes without ever having to make a monthly mortgage payment again as long as they continue to live in their home. The amount of money seniors can receive is based on the following: Age, lending limit in their county, the value of their property, and the current interest rate.
There are 3 Types of Reverse Mortgages (or lifetime mortgages):
- Single-purpose reverse mortgages are offered by some state and local government agencies and nonprofit organizations.
- Federally-insured reverse mortgages, are known as Home Equity Conversion Mortgages (HECMs) and backed by the U. S. Department of Housing and Urban Development (HUD)
- Proprietary reverse mortgages, are private loans that are backed by the companies that develop them
HECM is the most popular type of reverse mortgage offered. This type of reverse mortgage offer allows borrowers to choose from several different payment options.
HECM Payment Options:
- “Term” option – fixed monthly cash advances for a specific time.
- “Tenure” option – fixed monthly cash advances for as long as you live in your home.
- “Line of credit” that lets you draw down the loan proceeds at any time in amounts you choose until you have used up the line of credit.
- A combination of monthly advances and a line of credit.
Reverse mortgage loan advances are not taxable, and generally do not affect a seniors Social Security or Medicare benefits. Seniors keep the title to their home, and they do not have to make monthly repayments. The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence.
Reverse Mortgage Benefits
NO PAYMENTS! - The best feature of the reverse mortgage is that you never have to make a payment.
GOVERNMENT PROGRAM - Although a bank will most likely manage your loan, it’s the federal government that stands behind it. You never need to worry about the bank going out of business or someone trying to change the terms of the loan.
COUNSELING REQUIREMENT - In order to make sure that this is the right plan for you, the government requires that you have an independent third party non-profit organization review your case. Call Avrus SM and let us help find you free counseling!
GET CASH BACK - Not only do you never have to make payments, if there is enough equity in the home, you may be able to receive cash back at the closing. You can choose to receive the money in one lump sum or have it spread out over a time period that you specify.
BASIC CREDIT CHECK - Your credit does not matter. You can have bad credit or no credit. Either way it’s no problem!
NO INCOME REQUIREMENT – Since payments are not required, your level of income does not matter. Even if you’re currently not receiving any!