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Key Benefits
Turn Your Home Equity into Tax-Free Funds for Retirement
Retain Ownership
Retain ownership while exploring new possibilities. Reverse ownership lets you temporarily transfer possession, all while maintaining ultimate control and ownership of your property or asset.
Tax-Free Funds
The Internal Revenue Service (IRS) considers reverse mortgage proceeds as a loan, not as income. Therefore, they are exempt from federal income tax.
No Monthly Payments
Unlike traditional mortgages, reverse mortgages typically do not require monthly mortgage payments. The loan is repaid when the homeowner sells the home, moves out, or passes away.
Flexible Disbursement
Reverse mortgage borrowers have flexibility in how they receive their funds. They can choose a lump sum payment, monthly payments, a line of credit, or a combination of these options based on their specific financial needs and goals.
Supplement Retirement Income
A reverse mortgage allows homeowners aged 62 or older to tap into their home equity and receive funds that can supplement their retirement income. This provides financial flexibility and helps meet daily living expenses or cover unexpected costs.
Access to Home Equity
Reverse mortgages allow homeowners to access the equity they have built up in their homes over the years. This can be a valuable source of funds to pay off existing debts, medical expenses, or other financial obligations.
TOP 10 Reverse Mortgage Myths
1. I cannot get a reverse mortgage if I have an existing mortgage.
Fact: False.
If your house isn’t paid off, the proceeds you receive from the reverse mortgage must first be used to pay off any existing mortgage.
This is the most common reason most homeowners 62 and older take out a reverse mortgage.
2. If I take out a reverse mortgage, the lender will own my home.
Fact: False.
Homeowners still retain the title and ownership to their homes during the life of the loan, and can choose to sell the home at any time. As long as the borrower continues to live in and maintain the home and property taxes and homeowner’s insurance are paid, the loan cannot be called due.
3. There are restrictions on how reverse mortgage proceeds may be used.
Fact: False.
There are no restrictions. The cash proceeds from the reverse mortgage can be used for virtually any purpose. Many seniors have used reverse mortgages to pay off debt, have financial reserve, or to improve their lifestyle.
4. Only low-income seniors get reverse mortgages.
Fact: False.
Although some seniors may have a greater need than others for the monthly proceeds or lump sum funds, reverse mortgages offer:
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to be free of monthly mortgage payments
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maintain or improve their quality of life
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build their savings to help with future expenses
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long term care in the comfort of your home
5. If I outlive my life-expectancy, the lender will evict me.
Fact: False.
There is no time-limit on how long the borrower(s) can stay in their homes. Since homeowners still own the property, lenders cannot evict them as long as the borrower continues to live in and maintain the home, and property taxes and homeowner’s insurance are paid.
6. A reverse mortgage will affect my government benefits.
Fact: False.
A reverse mortgage generally does not affect regular Social Security or Medicare benefits. However, if you are on Medicaid, any proceeds that you receive would count as an asset and could impact Medicaid eligibility.
7. There are no objective advisors available to seniors trying to decide if a reverse mortgage suits their needs.
Fact: False.
Borrowers are required to work with independent, third-party counselors approved by the U.S. Department of Housing and Urban Development (HUD) in their local communities. This educational session is mandatory to complete the loan.
8. My children will be responsible for the repayment of the loan.
Fact: False.
If the estate wants to retain the property, the balance must be paid in full. However, if the borrower(s) or their estate sells the property to pay off the debt, there is no recourse if the Home Equity Conversion Mortgage loan balance exceeds the home’s value at maturity. Any equity remaining in the property after the reverse mortgage becomes due belongs to the borrower(s) or their estate.
9. The homeowner pays taxes on the proceeds of the reverse mortgage.
Fact: False.
The proceeds from a reverse mortgage are not considered income and are not taxable.
10. I have heard that I won’t qualify for a reverse mortgage because of my limited income or bad credit.
Fact: False.
The reverse mortgage does not use income as a factor. Seniors who do not qualify for traditional financing or re-financing are eligible for a reverse mortgage. No credit or bad credit is okay.
Loan amounts are based on the equity in the home.