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Using Home Equity as a Retirement Asset:

Reverse Mortgage Basics

Thank you for exploring your reverse mortgage options. We've included some basic information here on our website, but we encourage you to give us a call to discuss your individual circumstances.

The process of obtaining a reverse mortgage can be a complicated but we'll be with you every step of the way.

WHY SHOULD I CONSIDER A REVERSE MORTGAGE? 

  • 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 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
  • Delay collecting Social Security for a larger monthly benefit
  • Pay for medical or long-term care costs
  • Finance the purchase of a more suitable home with no monthly mortgage payments**

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 puzzle.

 

Reverse mortgages are increasing recognized by homeowners and financial advisors as a smart and safe way to acess 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 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
  • Delay collecting Social Security for a larger monthly benefit
  • Pay for medical or long-term 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 however you choose
  • 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 minimum monthly repayments required. (As the homeowner, you remain responsible for paying property taxes, homeowners insurance and homeowner's associate dues if applicable)

* Not tax advice. Consult a tax professional.** If the borrower does not meet loan obligations, such as keeping current with property taxes and required insurance, then the loan will need to be repaid.  *** Your reverse mortgage proceeds will first be used to payoff any existing mortgage balance(s) and/or federal debt.

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 Denny at Old Town Mortgage, (626) 303 7777, to find our if you have enough home equity to quality
  • Not be delinquent on any federal debt
  • Participate in a consumer information session held by an independent counselor who's approved by the U.S. Department of Housing and Urban Development (HUD)

Also, your home must:

  • Meet FHA (Federal Housing Administration) property standards and floor requirements
  • Be one of the following property types:
    • Single family home
    • Two- to four-unit home with one unit occupied by the borrower
    • FHA-approved condomimum

 

 

This material is not from HUD or FHA and has not been approved by HUD or any government agency.