When looking at a reverse mortgage to help you get the most out of your retirement, make sure you understand every aspect of the loan. Check out these valuable tools and how they can help you learn more about what you are acquiring. If you have any questions, give Patrick Kerwin in Dallas, TX, a call today!
Reverse Mortgage Facts and Features
Reverse mortgage loans have the power of longevity. The first was approved in 1961.
While you will still need to pay property taxes and insurance and maintain the property, no monthly mortgage payments are required.
There are multiple options to convert your home's equity to support your financial goals, such as receiving monthly payments, receiving a lump sum, or a growing line of credit over time.
Proceeds you receive from a reverse mortgage loan are paid out tax free. Nonetheless, you may wish to consult your tax advisor.
If the borrower passes away, an eligible non-borrowing spouse may be allowed to remain in the home providing they continue to maintain their home, pay property taxes and homeowners insurance, and otherwise comply with all loan terms.
If the borrower chooses to access their equity via a line of credit, interest only accrues on funds that are used. Access to funds that are not used will increase over time at the effective rate. This feature allows for growing the amount of cash you access should you need or want to access it later in retirement.
The FHA HECM loan is a non-recourse loan. This means that if your home sells for less than the loan balance, your heirs are not liable for the debt. Only the funds received from the sale of the home can be used to repay the loan.
At the time of application, your home mortgage balance does not have to be paid off to be eligible. However, the reverse mortgage loan proceeds you receive must be used to pay off an existing mortgage (if one exists) and other outstanding liens. You will continue to hold title to your home subject to the new lien securing the reverse mortgage loan.