Reverse Mortgages

A Reverse Mortgage (RM) allows homeowners, age 62 and older, to borrow against the equity in their home and to delay payment until they sell, transfer title, no longer permanently reside in the property or default on property maintenance, taxes, or insurance (maturity events).

In order to be eligible for an RM:

1. Borrowers must be 62 or older (everyone on title).
2. Borrowers must be the homeowner (even with a mortgage).
3. Property secured by RM must be borrower(s)' primary residence.

RMs provide three primary advantages to older homeowners.

• First, an RM offers liquidity. Seniors can access the dormant liquidity in their home.
• Second, the funds received from an RM are income tax-free. This advantage can help retirees potentially avoid paying unnecessary taxes, both on their personal and Socail Security incomes. Besides being income tax-free, an RM does not negatively affect Social Security or Medicare benefits.
• Third, and most importantly, RM repayment is deferred until a maturity payment and there are no required monthly principal and interest payments. This is a major distinction from traditional mortgages or HELOCs.

An RM is the only program that provides all three of these advantages.

Another attractive feature about an RM is that it is a very flexible and creative financial tool, allowing borrowers to customize the program to their individual needs. Except for fixed rate RMs which require a full disbursement of available funds at closing, adjustable rate RM borrowers can receive the funds in a variety of ways (lump sum, monthly distribution, or line of credit). After paying off any existing mortgages and liens, available funds can be used for practically any purpose.