Or, call David Whiteside at 800-820-6273

What is a Reverse Mortgage?

A Reverse Mortgage is a loan against your home that you do not have to pay back as long as you live there. Available equity can be paid to you all at once or in installments, or used as a credit line, etc. The loan is repaid when you die, sell, or permanently leave the home. The youngest borrower must be 62 or older, and the home must be your principal residence.

As long as you stay in the home THERE ARE NO MONTHLY MORTGAGE PAYMENTS.

How much money is available?

This depends on borrower age, zip code, home market value, and loan costs. Older borrowers in highly appreciated homes usually receive the most money.

If the home is owned outright, the maximum amount may be withdrawn.

If there is a small current loan balance, the RM may be used to pay off the home, and the remaining available equity withdrawn.

Frequently RMs are used to pay off somewhat larger balances, freeing up dollars previously spent on mortgage payments.

If using a Federally Insured RM (called a “HECM”), you can never owe more than the home’s value at time of sale. (This is called a “non-recourse” loan).

What is the downside?

Although no payments are made, and closing costs are typically financed, fees are more expensive than traditional mortgages. If the RM is paid off early, fees and interest take a comparatively larger bite out of home value at time of sale. Also, interest rates are not fixed, and can run at least as high as traditional adjustable rates.

Often the only up-front cost is the appraisal.

Remember that no fees or interest are actually paid from home value until you die or leave the home permanently. The obligation, while real and contractual, exists only “on paper” until that time - - accumulating until settlement.

The loan can be called due and payable in full if you fail to keep up the property or do not pay necessary taxes and homeowner’s insurance.

How does a Reverse Mortgage help with LTC costs?

Loan proceeds can be used to pay …

• premiums for LTC insurance…
• …and/or premiums for LIFE insurance, guaranteeing that upon death there will be funds to repay some or all of the balance due on the RM…
• …or for premiums for a combined Life/LTC policy.
• for care costs, especially if a homeowner is uninsurable.
  

A common scenario:

• RM set up as a credit line, used only for annual Life/LTC premiums, with the remaining equity held in reserve.
• The credit line grows each year by the note rate, which may offset some or all of the annual LTC/Life cost. (Great feature of RM credit lines, call for details)
• Home equity continues to appreciate each year, raising the amount available at settlement, which will offset some or all of the actual debt accumulated.
• At death, the life insurance proceeds are also available to retire RM debt.
  

EACH SITUATION IS UNIQUE. Not everyone should use a Reverse Mortgage. We will assist you to explore all available strategies and options.

Call David Whiteside at 800-820-6273

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