5 Reverse Mortgage Facts

1. Your home still belongs to you and not the bank.

Many potential borrowers are worried that with a reverse mortgage, you are signing away the deed to your property and it now belongs to a bank. Fortunately, a huge benefit to many senior citizen homeowners is that with a reverse mortgage loan, you still maintain ownership and the deed to the home, not the bank.

2. There are multiple payout plans.

To assist with a senior’s financial planning process for their retirement years, reverse mortgages have multiple options for a payout plan, depending on your current needs. Here are the ways that you are able to receive your reverse mortgage funds:

a. Limited lump Sum Payment: The borrower will receive a limited lump sum payment.

b. Fixed Monthly Payment Plans: The fixed monthly payment option allows borrowers to receive a specified amount of money for a certain period of time (i.e. borrower will work out plan to receive $500 a month for 60 months).

c. Line of Credit : A borrower can choose to set up a line of credit with their lender, which allows them to withdraw funds when they need it until they reach their loan limit.

d. Combination: Another option is when borrowers can choose a combination of any of the three to suit their needs. For example, borrower could take out a portion of their funds in a lump sum and receive the rest as monthly payments.

3. You must attend a counseling session.

Before a borrower can obtain a reverse mortgage loan, they must meet with an FHA-approved third party reverse mortgage counselor. This is a mandatory meeting, but it can be very beneficial to those who are interested in getting a reverse mortgage loan as they will provide unbiased information about the reverse mortgage process, as well as help you determine if you have exhausted all your options.

4. There is no restriction on how money is spent.

The lack of restrictions on how your reverse mortgage money is spent is beneficial as you can use it to help improve your quality of life. Many borrowers tend to use it to pay off other mortgages, to pay for long-term health care or even a reliable car to use during their retirement years. Some borrowers have the mindset that they want to spend the money on themselves and their families while they are still around, so they take their family members on a cruise or even assist in paying their grandchildren’s college expenses. Reverse mortgage loans can help assist borrowers in many different ways, so that they can live their retirement to its full potential.

5. You don’t have to pay back the reverse mortgage loan during your lifetime.

While you don’t need to worry about paying back the loan during your lifetime, there are maturity events that can make the loan become due. As long as you maintain your borrower responsibilities, you do not have to make payments during your lifetime.

a. Borrowers must live in home as primary residence.

b. Borrowers must continue to pay taxes and insurances on home.

c. Borrowers must keep up with maintenance of the home.

To learn more about how a reverse mortgage can work for you, speak with an advisor at 1-888-808-8486.

 

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