Reverse Mortgages Part 1

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February 9, 2018
Reverse Mortgages Part 1

Image Copyright Ted Grussing Photography – Used with permission

Today we are going to begin a series about Reverse Mortgages and if one may be appropriate for you! Reverse mortgages are a type of loan available to homeowners who are 62 or older. They are a tool which, when the circumstances are right, can increase your income without increasing your payments.

It’s important to remember, however, that there are pros and cons to taking a reverse mortgage. Today’s installment will focus on most of the possible advantages.

If you take a Reverse Mortgage on your home:

  • You can remain in your home, retain the title to it and receive payments from your home equity.
  • Sometimes you can receive enough money from a reverse mortgage to pay off an existing mortgage—thereby freeing yourself from house payments.
  • The payments received from a reverse mortgage are usually not taxed as income and should not affect your social security or Medicare benefits.
  • You can receive your payments, monthly, in a lump sum or as a line of credit taken as you need the money.
  • You do not have to make monthly mortgage payments as long as you live in your home and continue to pay taxes, insurance, HOA fees etc.
  • After the loan is paid any remaining equity is still yours or your heirs’.
  • If your house increases in value at some time in the future you may be able to refinance the reverse mortgage and get more equity out of your house.
  • A reverse mortgage is a non-recourse loan. This means you or your heirs will not be liable for any amount of mortgage that exceeds the value of your house.
  • Closing costs and other fees can be financed into the reverse mortgage and paid later.

Keep in mind that you do still need to pay taxes and insurance as well as keep the property in good condition. The payments act as a lien against your house.

The decision to take a reverse mortgage on your home is not one to take lightly. If you are considering taking a reverse mortgage make sure you discuss it in detail with a trusted professional before acting.

Have a great weekend!

This topic was requested by a viewer. Feel free to write us if you have any topic requests email:info@cmwwealth.com

Sources:

Pros and Cons. (n.d.). Retrieved from https://www.reversefunding.com/pros-cons