Mortgages

Reverse Mortgages 

Boy have things changed! The reverse mortgage of old no longer exists. Today's reverse mortgage are government insured, require an independent counseling interview prior to application, and all those myths about losing the home, etc are nothing more than myths. Today many financial professionals and advisers are discussing reverse mortgage as part of their financial plan for seniors and not as a last resort option.

For many seniors the equity in their home is their largest single asset, yet it is unavailable to use unless they use a home-equity loan. But a conventional loan really doesn't free up the equity because the money has to be paid back with interest. A reverse mortgage is a risk-free way of tapping into home equity without creating monthly payments and without requiring the money to be paid back during a person's lifetime. Instead of making payments the cash flow is reversed and the senior receives payments from the bank. Thus the title "reverse mortgage".

Many seniors are finding they can use a reverse mortgage to pay off an existing conventional mortgage, to create money for a down payment for a second home or to pay off debt. Popularity is skyrocketing. Over the last five years the number of reverse mortgages nationwide has tripled. The uses of this untapped wealth are only limited by a person's imagination.

A reverse mortgage is a loan against the equity in your home that provides you cash advances, but requires no mandatory monthly re-payments during the life of the loan. If the interest is unpaid, it is allowed to accrue against the value of your home. If you do choose to pay any portion of the interest, it may be deductible against income, as would any mortgage interest.

You must be at least 62, own and live in, as a primary residence, a home, condominium, co-op, permanent mobile home, or manufactured home in order to qualify for a reverse mortgage. There are no income, asset or credit requirements. It is the easiest loan to qualify for.

A reverse mortgage is similar to a conventional mortgage. As an example:

 

 

 

  • The bank does not own the home but owns a lien on the property just as with any other mortgage
  • You continue to hold title to the property as with any other mortgage
  • The bank has no recourse to demand payment from any family member if there is not enough equity to cover paying off the loan
  • There is no penalty to pay off the mortgage early

The proceeds from a reverse mortgage are tax-free and available as a lump sum, fixed monthly payments for as long as you live in the property, a line of credit; or a combination of these options. These proceeds can be used for any legal purpose you wish:

  • daily living expenses
  • home repairs and improvements
  • medical bills and prescription drugs
  • pay-off of existing debts
  • education, travel
  • long-term care and/or long-term care insurance
  • financial and estate tax plans
  • gifts and trusts
  • to purchase life insurance
  • or any other needs you may have.

The amount of reverse mortgage benefit for which you may qualify, will depend on

  • your age at the time you apply for the loan,
  • the reverse mortgage program you choose,
  • the value of your home, current interest rates,
  • and for some products, where you live.

Data Source:National Care Planning Council, by Stephen Lamoreauz

New Purchase and Refinances 

New Purchase and Refinances are available, as well. Before you make this purchase or look at a refinance, call my office to get a financial analysis prepared to see what may be the best form of loan for you BEFORE you commit to any financial obligation.

Joe is a Mortgage Loan Originator with Professional Mortgage Alliance. Allow him and his consultative team to review if a reverse mortgage may be  an appropriate tool for your financial future.

Go directly to www.professionalmortgagealliance.com/joe-valenzuela/

 

 

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