Why should I consider a reverse mortgage?
Your retirement funds may come from savings, investment income, and Social Security. But now, there’s another source that may help you complete the longevity planning puzzle. Reverse mortgages are becoming increasingly recognized by homeowners and financial advisors as a smart and safe way to access an important retirement asset: home equity.
Most reverse mortgages are government-insured Home Equity Conversion Mortgages (HECMs). You will often hear the terms used interchangeably. Available exclusively to people age 62 and older, a reverse mortgage could help you live more comfortably and be more financially prepared for the future.
- For example, you can use a reverse mortgage to » Avoid selling investments at a loss in a “down” market
- Establish a “stand-by” line of credit that you can tap as needed. Unlike a traditional Home Equity Line of Credit (HELOC), a reverse mortgage line of credit cannot be reduced or revoked, as long as the terms of the loan are met. And the unused line of credit grows over time.
- Supplement retirement income with tax-free* funds
- Pay for medical or longterm care costs
- Finance the purchase of a more suitable home, with no monthly mortgage payments*
Among the benefits of a reverse mortgage:
- The ability to use your home equity to help you maintain a more comfortable standard of living, in your own home.
- Tax-free* loan proceeds you can use in multiple ways. Great flexibility. You can choose to take your proceeds as a line of credit; monthly advances for a set period of time; a monthly stream of funds for as long as you live in your home; a lump sum; or a combination of these options.
- No monthly mortgage payments**. If you qualify and have an existing mortgage, home equity loan or any other type of debt, you can pay it off and reduce your monthly expenses.+ Or, if you own your home free-and-clear, you can get the additional funds you need with no monthly mortgage payments. (As the homeowner, you remain responsible for paying property taxes, homeowners insurance, and homeowner’s association dues if applicable.)**
To be eligible for a reverse mortgage, you must:
- Be at least 62 years old
- Live in the home as your primary residence
- Have sufficient home equity. Contact your C2 Reverse Mortgage Loan Officer to find out if you have enough home equity to qualify
- Not be delinquent on any federal debt
- Participate in a consumer information session held by an independent counselor who’s approved by the S. Department of Housing and Urban Development (HUD)
How much money can I get?
This depends upon a number of factors, including the age of the youngest borrower, your home’s current appraised market value, the amount of equity, FHA lending limits, the current interest rate, and the reverse mortgage product and payment option you choose. If you have an existing mortgage, your reverse mortgage will first be used to pay that off. Your C2 Reverse Mortgage Loan Officer can provide you with a quote that’s tailored to your specific situation, with no cost or obligation.
