Trusted Advisors
A loan officer can explain the operation of a reverse mortgage line of credit.
Did you know that a government-backed Home Equity Conversion Mortgage (HECM) or a private jumbo reverse mortgage for higher-valued properties might be a great instrument for high-net-worth clients to avoid portfolio depletion? Taking into account the client's scenario, it is a loan that needs to be considered. We can supply you with extensive loan possibilities (with your client's agreement) to assist you make a decision that is in the best interests of all parties. We are honest with all of our clients regarding the benefits and drawbacks of a reverse mortgage.
Advantages
Reverse mortgages offer numerous benefits to senior borrowers. Here is a brief list of a few:
The proceeds from a reverse mortgage are normally not affected by Social Security or Medicare.***
Allows them to access a piece of their home's value without having to make monthly mortgage payments. Borrowers must keep up with continuing property obligations, including homeowner's insurance and property tax payments.
It is possible that a senior will be able to acquire a new house with no monthly principal and interest mortgage payments.
Borrowers must pay their property taxes on time, maintain the needed homeowner's insurance, and keep their home in excellent repair.
Improves a senior's standard of living or enables them to spend their non-working years with fewer financial concerns.
Pays off an existing mortgage, freeing up monthly cash flow that would have gone to mortgage payments.
There are no longer any required principal and interest mortgage payments with a reverse mortgage.
Borrowers must continue to live in their house as their principal residence, pay homeowner's insurance and property tax obligations, and maintain the property in accordance with HUD regulations.
Allows the senior to remain independent while living in their own home.
It pays for in-home health care or medical bills.
Disadvantages
A couple talks with their reverse mortgage loan officer about their retirement plans.
Potential foreclosure if the borrower fails to meet the loan's ongoing obligations, such as paying property taxes, homeowner's insurance, or other required property charges, and must maintain the property in accordance with HUD rules.
Makes use of equity that could be passed on to the estate or offspring.
Over time, the loan balance rises while equity falls.
Eligibility for need-based programs such as Medicaid may be affected.
If no interest is paid out of pocket, a reverse mortgage can eliminate the deduction for home interest for those who itemize their tax deductions.
However, if the homeowner pays the upfront fees as well as the accruing interest, they may be eligible for the homeowner deduction in the year the interest is paid.
Closing costs and insurance are applicable, so borrowers should plan on staying in the home for at least a couple of years.
The only Reverse Mortgages insured by the FHA are Home Equity Conversion Mortgages.
Who Should Think About a Reverse Mortgage?
A parent with significant home equity but a limited or fixed income.
Desires to maintain or improve one's lifestyle.
Prefers to access mortgage loan money rather than other potentially taxable accounts or sources.
*Ask your financial counselor for advice.
**Under normal circumstances, you cannot lose your house as long as you pay your property taxes, homeowner's insurance, maintenance charges, and other loan terms.
***It should be noted that any government benefits based on need could be compromised by a reverse mortgage. In such cases, homeowners receiving such benefits should seek skilled professional guidance.
This material is not provided by, nor was it approved by the Department of Housing & Urban Development (HUD) or by the Federal Housing Administration (FHA). It is not intended to be a substitute for legal, tax, or financial advice. Consult with a qualified attorney, accountant, or financial advisor for additional legal or tax advice.
*There are some circumstances that will cause the loan to mature and the balance to become due and payable. The borrower(s) must continue to pay for property taxes and insurance and maintain the property to meet HUD standards or risk default. Credit is subject to age, minimum income guidelines, credit history, and property qualifications. Program rates, fees, terms, and conditions are not available in all states and subject to change.
Reverse My DebtRevers
Mortgage Specialists
NMLS #350697
8050 Florence Ave. Suite 210
Downey, CA 90240
Phone: (949) 990-3185
Work Phone: {949) 990-3185
Cell Phone: (949) 990-3185
New Aim Funding, Inc., NMLS #1759842
NMLS Consumer Access
Disclosures & Licensing
Privacy Policy