Should my loved ones get a Reverse Mortgage LOAN?
What Every Family Should Know About Reverse Mortgage Loans.
Understanding the Basics
What is a Reverse Mortgage Loan?
A reverse mortgage is a lot like a mortgage you’d get from a bank or credit union. However, there are key differences that make reverse mortgages better suited for people who are retired or looking ahead to retirement. One major advantage is its flexible repayment feature, which allows the borrower to make any size monthly mortgage payment, or even none at all.* Most reverse mortgages are FHA-insured** Home Equity Conversion Mortgages (HECMs). The typical reverse mortgage candidate is at least 62 years old, has 50% or greater equity in their home, and wants to:
- Reduce or eliminate monthly mortgage payments
- Consolidate other debt,such as credit card balances
- Make home improvements, or purchase a new home
- Establish a line of credit for unplanned expenses
With a HECM, the borrower can choose to take their funds as a line of credit, lump sum, monthly advances, or a combination of these.† In addition to HECMs, some lenders have also introduced proprietary loan products to accommodate a broader array of borrowers. For example, we also offer Equity Elite®, which is available to those as young as 60.‡ It is designed specifically for borrowers who want lower up-front costs, own or want to purchase a condominium that is not FHA-approved**, or those looking to access the maximum loan proceeds for their higher-valued home. See page 4 for additional details.
What are the costs involved?
How is a Reverse Mortgage Loan Repaid?
If the loan balance exceeds the home’s value when my parents pass, am I responsible?
What are the Loan Obligations?
Exploring Your Family’s Options
Are there alternatives to Reverse Mortgage Loans?
Which financing option is right for your family?
What if there’s an existing mortgage on the home, or an outstanding home equity loan?
Common Family Concerns
Will the bank own the home?
Isn’t a Reverse Mortgage a loan of last resort?
What about our inheritance?
What protections are there for borrowers and their families?
Reverse mortgages come with built-in safeguards to help ensure borrowers are making wise choices. These include: Financial Assessment. All reverse mortgage lenders are required to conduct a financial assessment to ensure the borrower has adequate cash flow to pay ongoing costs, such as property taxes and homeowners insurance, over the life of the loan. Borrowers must provide documentation, such as tax returns and bank account statements for all sources of income.
How to Choose a Lender
For most people, a mortgage is one of the biggest financial commitments they’ll ever make. So it’s important to do your homework and find a lender that makes everyone feel informed, confident and comfortable in the decision-making. Asking probing questions—and hearing straightforward, honest answers—will help a family feel that the they are heading down the right path in securing a comfortable retirement. If you work with a financial advisor, bring them into the process.