Is a reverse mortgage right for me, should you consider a HECM loan – am I eligible for a for the reverse program? - Wondering whether the reverse mortgage is right for you? Who is the reverse mortgage right for? How can you benefit from using a reverse mortgage loan in your retirement planning? Who should consider a reverse mortgage?
Who are YOU? these are some examples which can describe your situation if your situation is not described call us so we can talk about your specific needs
My spouse is not yet 62 – can we still get a reverse mortgage? This decision has to be made on your part, the main problem with this scenario is that if anything happens to the borrower on the reverse loan then the mortgage loan will come due. With this if you are in good health and your spouse is close to 62 then this makes the scale tips towards getting a HECM reverse, but if you are not in good health or your spouse is a lot younger (equity is also important to know to really answer this question) then you might be better off waiting. again your call
My home is all my only asset in retirement, should i consider a reverse mortgage? If you do not have a savings account or pension, and only depend on fixed income ( social security ), then you have to make the right decision with your home in retirement ( equity again is important to answer this question ) depending on how much equity is available and your age – you can use the HECM to supplement your retirement income. This can give you new income, and still keep the equity available for the future if needed. Dont forget that as your home increases in value it will also give you more equity for your retirement.
I have many assets, my home being one of them, some are more liquid than my home? Having other assets is great, how liquid are they? ( how fast can you get cash from them ), with the reverse mortgage you can take out equity within 1 month, at a low interest rate 9 both fixed and adjustable ), you really need to consider the portfolio to see which are the highest returning assets. If you can borrow at 2.5% and you can return a heft 5% a year in investment returns that might be a bad move to make, as liquidating those assets will incur penalties and loss of return on investment.
I want to leave equity to my heirs, this is important to me and my family? the reverse mortgage will not drain all of your equity – or at least it is not designed to do so, with the current mortgage rates at (2.5-5% ) you can lock in a low fixed rate, which gives your home the ability to increase more in value than that rate. This is one of the biggest factors to draining the equity ( besides the closing costs, interest rate you receive – no fee reverse mortgages now exist ) we cannot control home prices but historically speaking they will offset the costs of the loan and in some years outpace it. Now the actual reverse mortgage wont give you complete 100% access to all the equity ( example if you are 62 years of age then you can borrow up to 57% ) thus you will have roughly 40-60% of equity available from the beginning. It is your equity and your retirement, your heirs will have the opportunity to own your home, we can review and give better advice with more information present as well.
I plan to buy a home – how do I use a reverse mortgage purchase loan? you can use a reverse mortgage loan to buy your home in retirement – it works by using the equity in your home – or you can put a down payment and use the HECM reverse mortgage to finance the remainder ( thus you own your home in retirement and no mortgage payment will be made).
I am thinking about selling my home in retirement, or maybe considering a taking a reverse mortgage? Selling is an option, sometimes the right move to make but sometimes it is best to wait for the housing market to rebound ( completely up to you – the numbers never lie – compare all the fees and outcomes). Taking a reverse mortgage can be the right solution but the problem here is you are thinking about selling the home ( the reverse mortgage can be used for a short term – the HECM saver is probably the way to go – as rates are low and there is the option for a no fee reverse mortgage.) If selling is going to make you loose money or if waiting you believe you can make a larger return on investment – then consider a reverse loan so you can hold on – release some equity – and then you can sell in a few years.
HECM reverse mortgage – home equity conversion mortgage is designed to allow seniors to tap into their home’s equity, without having normal mortgage obligations like monthly payments. You can essentially use this access to your equity to retire on or help you retire depending on how much equity you have available.
This is a loan against your home which does not have to be paid back until you leave the property for 12 months, unlike a traditional mortgage or home equity line of credit which payments are due on a monthly basis.
Benefits reverse mortgage loan :
- select how you want to receive your income ( monthly, lump sum, credit line)
- keep ownership of the home
- never have to pay mortgage payment
- the income/money is not taxed
- retire on lifetime monthly income
- have peace of mind – never run the risk of foreclosure
- leave equity for your heirs/estate
Why No is the right time for a reverse mortgage
- current HUD lending limits are high so you can borrow more or pay off any existing mortgages ( currently at $625,000 )
- reverse mortgage rates are at all time lows
- currently there aren’t any income or credit score requirements
Are You Eligible for a HECM reverse mortgage?
- must be 62 or older
- must have enough equity to pay off existing loans and for the reverse loan
- primary residence ( you must live in the home)
- never have defaulted on government debt
Reverse mortgages do not take into consideration your credit score and/or income, so if you have been unable to get a traditional mortgage qualifying for a reverse mortgage is much easier.
Do You Need or Want the Money?
Retirement planning has to be done with a long-term perspective, seniors are living very long healthy lives, so it is important to plan for this long retirement. Many seniors who take out reverse mortgages do it to supplement their income, and to free up some money so they can have a higher quality retirement.
Do you have access to a financial planner? Can you review your whole financial situation to figure out how you should plan financially for the future. If you are working with a reputable reverse mortgage company they can assist with some basis retirement planning relating to the loan. You have to consider how much money you need, and for how long, that is the basic need you have to fulfill. If you plan on taking a reverse mortgage to supplement income many seniors do take these loans to pay for medical expenses, traveling, helping the family, and just to enjoy retirement a little more.
- Myth The bank will own your home.
- Myth Your children will be held responsible for paying the loan back.
- Myth Reverse mortgage lenders take advantage of seniors.
- Myth You need good income and credit scores to qualify for reverse loan.
- Myth To qualify, you must own your home free and clear.
- Myth You won’t have any equity left in your home to leave for your heirs.
- Myth Once you get a reverse mortgage, you cannot sell your home.
- Myth You will see a reduction in your Social Security income.
- Myth Reverse mortgages are only for seniors that are poor.
- Myth Closing costs are way too expensive.
- Myth The loan is due and payable when the first borrower dies.
“Only you can answer whether a reverse mortgage is right for you, our job is to make sure you understand the program inside out so you can make an educated decision. We work with top national reverse mortgage lenders in order to save you time and money when you are sure that a reverse mortgage is right for you!”
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IS A REVERSE MORTGAGE RIGHT FOR ME? RIGHT CHOICE FOR YOU By Paul Galante – Add me to your circles
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