Reverse Mortgage Loan Blog

1. What are Reverse Mortgages?Reverse Mortgages are a way to borrow against the equity in your home (the value of your home minus any debt you now have) in order to provide you with a tax-free income if you are 62 years of age or older. You continue to own, and live in, the home for the life of the loan. There are no loan payments until the loan ends. The money you receive can be in the form of:

·A lump sum of cash

·Regular monthly payments for your life or for as long as you live in the home.

·Regular monthly payments for a fixed length of time.

·A line of credit to draw on when you need it.

·A combination of options 2 & 4 or options 3 & 4 above.

2. When is a Reverse Mortgage right for you?

A Reverse Mortgage might be worth considering if:

You are committed to staying in your home, either because you don’t want to leave or because other housing alternatives are unappealing or unaffordable.

·You want to enhance your lifestyle and enjoy your golden years.

·You want a cushion for major expenses such as medical bills for a serious or long-term condition, or for major home repairs.

·You have a regular need for additional income to live on and your only significant asset is your home.

·You want the peace-of-mind that comes from knowing your financial needs are taken care of.

·You own your home free of debt or you have a small first mortgage.

·You don’t plan to leave your home to your heirs through inheritance.

3. What are some of the potential advantages of Reverse Mortgages?

·A Reverse Mortgage can help you maintain your financial independence or improve your quality of life.

·It allows you to remain in your home and keep title to your property.

·The money you receive is tax-free. It is not usually considered income.

·You make no payments (principal or interest) until the loan ends or the house is sold.

·Your income is not a consideration in obtaining the loan since there are no payments until the loan ends.

·You cannot owe more than the value of the house at the end of the loan.

4. What are some of the potential drawbacks of Reverse Mortgages?

·Reverse Mortgages are even more complicated than conventional mortgages and the consequences of various options are not always obvious up front.

·They may be relatively expensive compared to other alternatives.

·Although the money you receive is tax-free, it may affect your eligibility for “need based” public assistance benefits such as Medicare, Supplemental Social Security Income (SSI) and Medicaid/MediCal.

·Reduces the equity you have in the property which could cause a potential negative impact for your heirs.

·Reverse Mortgages are often not well understood, even by real estate and legal professionals. (Check out their experience before accepting their advice.)

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