10 Essential Facts About Reverse Mortgages

Confusion about reverse mortgages is common, with conflicting information often making it difficult to fully understand them. This post aims to clear up the confusion by offering ten essential facts about reverse mortgages, helping you make a more informed decision.

Reverse Mortgages Use Your Home’s Equity

Reverse mortgages allow homeowners to borrow against their home equity, receiving money from the lender. This amount is recouped once the home is sold, the owner moves out, or passes away.

Choose How to Receive Your Money

Funds from a reverse mortgage can be taken as a lump sum or in monthly installments. Different methods may be suited for varied financial situations.

Types of Reverse Mortgages

There are three types: home equity conversion mortgages (HECMs), single-purpose reverse mortgages, and proprietary reverse mortgages. HECMs are the most popular, providing flexibility for any financial need.

You Still Need to Pay Property Taxes and Insurance

Reverse mortgages do not eliminate ongoing property expenses such as taxes and insurance. Borrowers must maintain the home and stay current on these payments.

Your Home Must Be Your Primary Residence

These loans require that the home be your primary residence. Extended absences could trigger early repayment.

You Will Still Own Your Home

Despite taking out a reverse mortgage, you remain the titleholder of your home.

No Monthly Mortgage Payments

One major benefit of reverse mortgages is the lack of monthly payments, appealing to retirees or those on fixed incomes.

Federal Debt Delinquencies Can Disqualify You

Outstanding federal debts, such as unpaid taxes, can disqualify applicants from obtaining a reverse mortgage.

You Must Have Paid Off (or Nearly Paid Off) Your Home

To qualify, you need substantial equity in your home, meaning it should be fully or almost fully paid off.

Age Requirement: 62 Years or Older

These mortgages are available to individuals aged 62 and older. Younger people might consider options like a home equity line of credit (HELOC).

Reverse mortgages can be a valuable tool for some, but understanding key facts is crucial before moving forward. For personalized advice, consider reaching out to a financial advisor or mortgage specialist.

Get in touch today to see if a reverse mortgage is right for you.