Reverse Mortgages have become popular across America. At All American Advisors, we help our clients to explore and obtain Reverse Mortgages, typically in the form of an insured private loan. They are a safe plan to provide older individuals greater financial security. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements, and more. Since a home is generally a client's largest single investment, it's smart to know more about reverse mortgages, and decide if one is right for you.
1. What is a reverse mortgage?
A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. All American Advisor's reverse mortgage plans work to provide the best benefits at the lowest rates for our clients.
2. What types of homes are eligible?
Your home must be a single family dwelling or a two-to-four unit property that you own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. It is possible for individual condominiums units to qualify under the program.
3. What's the difference between a reverse mortgage and a bank home equity loan?
With a traditional second mortgage, or a home equity line of credit, a client must have sufficient income versus debt ratio to qualify for the loan, and is required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of current income. The amount a client can borrow depends on age, the current interest rate, and the appraised value of the home. Generally, the more valuable the home is, the older the client is, and the lower the current interest rate, the more a client can borrow. The client doesn't make payments, because the loan is not due as long as the house is the principal residence.
4. Can the lender take my home away if I outlive the loan?
No. The client does not need to repay the loan as long as he or one of the borrowers continues to live in the house and keeps the taxes and insurance current. With a reverse mortgage, the client can never owe more than the home's value.
5. Will I still have an estate that I can leave to my heirs?
When the client sells the home or no longer use it for a primary residence, he or his estate will repay the cash received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in the client's home belongs to the client or to his heirs.
6. How do I receive my payments?
The client has five options:
- Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
- Term - equal monthly payments for a fixed period of months selected.
- Line of Credit - unscheduled payments or in installments, at times and in amounts of borrower's choosing until the line of credit is exhausted.
- Modified Tenure - combination of line of credit with monthly payments for as long as the borrower remains in the home.
- Modified Term - combination of line of credit with monthly payments for a fixed period of months selected by the borrower.
We assist our clients in finding the best programs and rates available for the reverse mortgage process, taking into consideration the value of the home, what type of payment option the client prefers, as well as (when applicable) exploring how the cash converted from equity can be best used towards retirement income planning.
Contact us for a free assessment of your Reverse Mortgage options.