How can a reverse mortgage help you?
A reverse mortgage is a safe and secure financial tool that allows homeowners 62 years and older to tap into the equity they have earned in their home. There are several ways a reverse mortgage can help homeowners in retirement.
Receive Cash Now
The equity in your home is yours to use. With a lump sum payout or fixed monthly payment, you can access your earned equity for home renovations, healthcare costs or other major expenses.
Eliminate Your Monthly Mortgage Payment
Use the proceeds of your reverse mortgage to eliminate your monthly mortgage payment and free up funds in your budget. Use the proceeds of your reverse mortgage to eliminate your monthly mortgage payment and free up funds in your budget. Taxes and Insurance are still the responsibility of the homeowner.
Save for a Rainy Day
Set up a growing line of credit as a standby safety net that can be used when unexpected expenses arise. Watch the unused principal grow over time, giving you access to more funds the longer it goes unused.
Buy Your Dream Retirement Home
Use a reverse mortgage to right-size to a home that meets your long-term goals while incurring no monthly mortgage payments on your new home loan.
How does a reverse mortgage work?
The most common type of reverse mortgage is the home equity conversion mortgage (HECM) and is highly regulated and insured by the Federal Housing Administration (FHA). It’s a financial tool that allows homeowners 62 and older to cash out the equity in their home without the requirement of a monthly loan payment.
Unlike traditional home mortgage loans, a reverse mortgage provides homeowners with payouts from their equity as a loan. The loan is due and payable using the proceeds of the sale of the home or the proceeds from a refinance when the last borrower or eligible non-borrowing spouse moves out of the house or dies.
How do I qualify for a reverse mortgage?
As a government-insured and federally regulated mortgage loan,
there are several important requirements borrowers must meet to qualify.
You must be at least 62 years old.
You must own your home.
The home must be your primary residence.
Call Mike at 303-396-2804 for more details and to verify your qualification.
Fixed Rate
This HECM option provides the security of a fixed interest rate for the life of the loan. It may be a great option when taking a full draw to pay off a large mortgage or for a new home purchase with a HECM for Purchase.
Variable Rate
Similar to traditional ARM’s, your initial interest rate is comprised of a fixed margin and an index that will adjust on either an annual or monthly basis. All variable loans have a lifetime interest rate cap.
The benefit of a viable rate HECM is that it provides the greatest flexibly on how you elect to take your loan proceeds. Variable HECMs allow you to set up ongoing monthly term or tenure payments and/or set up a growing line of credit.
Unique Benefits of the
HECM Line of Credit:
-
This federally insured LOC cannot be frozen, cancelled or reduced, even if home values fall.
-
All of the un-used credit grows every month, based on the Credit Line Growth Rate.
-
The Credit Line Growth Rate is tied to the interest rate. If interest rates rise, the growth rate on the LOC will also increase, offering greater borrowing power.
-
Since this is a HECM, debt service is optional. Your can defer all principal and interest until the borrower(s) permanently vacate the home**
-
If the client chooses to make payments at any time, the available credit increases accordingly (just like a traditional HELOC).
Home Equity Conversion Mortgage for Home Purchase (H4P)
If your goal is to right size your housing needs by purchasing a new home instead of accessing the equity in your current home, one way to do so is to utilize a HECM for Home Purchase (also known as an H4P, Reverse For Purchase and Purchase HECM). This means utilizing a HECM loan on the home you are buying instead of having to qualify for a traditional mortgage. When you utilize a Purchase HECM, your HECM funds are paid in a lump sum directly to the seller at the close of escrow – just like with a traditional mortgage. However, the big difference is that you will never be required to make monthly loan payments for as long as you live in your new home** and continue to satisfy loan conditions. Loan requirements include home maintenance and payment of property taxes, homeowner’s insurance, and any HOA fees.
The Purchase HECM is ideal for those who want to purchase the best home for their retirement needs – without impacting their monthly cash-flow by taking on another monthly payment obligation.
Benefits of Purchasing
Your Next Home
with a HECM
-
Increased purchasing power to buy the home that best meets your needs
-
Keep additional cash assets in reserve to maintain a more comfortable retirement
-
Increased monthly cash flow- since monthly mortgage payments are not required you are able to minimize the impact on your monthly obligations
Depending on the program you choose, you determine how you receive your money. Your personal plan may include:
-
A monthly supplement - increase your cash flow for life
-
A partial or lump-sum payment - paid at closing
-
A line of credit - access funds when needed/credit line grows over time or a combination of the three