Overview

What Is A Reverse Mortgage?

A reverse mortgage allows you to borrow against the equity you’ve established in your home. To be eligible, you must be age 62 or older and own your home free and clear or have a remaining mortgage balance that can be paid off by the reverse mortgage.

You’ll want to consult a tax advisor to confirm this, but in most cases a reverse mortgage gives you access to tax-free funds. Instead of making payments, you can choose to receive them. That’s the “reverse” part of a reverse mortgage.

Why Get A Reverse Mortgage?

There are no restrictions on how you may use proceeds received through a reverse mortgage. You can direct the funds toward a variety of purposes, including:

• Reducing high-interest debt
• Supplementing retirement income
• Remodeling or repairing your home
• Paying property taxes
• Covering healthcare expenses
• Planning for long-term care needs
• Growing your investment portfolio

You can even use your reverse mortgage funds to purchase a second or vacation home.

How Does It Differ From A Traditional Home Loan?

With a traditional mortgage or home equity loan, homeowners borrow a large amount of money and make monthly payments. They also need a sufficient debt-to-income ratio to qualify and make monthly mortgage payments. A reverse mortgage pays you, and is available regardless of your current income or debt-to¬income ratio.

Three Essential Facts

Making an educated decision begins with undoing common misconceptions that keep many senior homeowners from looking into the advantages of a reverse mortgage. Contrary to what you may have heard — as long as all property tax, insurance and maintenance requirements are met:

1. You cannot owe more than the value of your home.
2. You retain title to the property.
3. You receive payments instead of making them. Please ask your reverse mortgage consultant for details about when repayment may be due.