Reverse Mortgage Loans
Improve your life by cashing in on your home’s equity
Whether seeking money to finance a home improvement, pay off a current mortgage, supplement their retirement income, or pay for healthcare expenses, many older Americans are turning to “reverse” mortgages. They allow older homeowners to convert part of the equity in their homes into cash without having to sell their homes or take on additional monthly bills.
In a “regular” mortgage, you make monthly payments to the lender. But in a “reverse” mortgage, you receive money from the lender and generally don’t have to pay it back for as long as you live in your home. Instead, the loan must be repaid when you die, sell your home, or no longer live there as your principal residence. Reverse mortgages can help homeowners who are house-rich but cash-poor stay in their homes and still meet their financial obligations.
To qualify for most reverse mortgages, you must be at least 62 and live in your home. The proceeds of a reverse mortgage (without other features, like an annuity) are generally tax-free from the proceeds from a reverse mortgage loan, and many reverse mortgages there are minimal income and credit requirements necessary to quailfy for a reverse mortgage loan. The borrower's must continue to pay property taxes and homeowners insurance.
Three Types of Reverse Mortgages
The three basic types of reverse mortgage are: single-purpose reverse mortgages, which are offered by some state and local government agencies and nonprofit organizations; federally-insured reverse mortgages, which are known as Home Equity Conversion Mortgages (HECMs), and are backed by the U. S. Department of Housing and Urban Development (HUD); and proprietary reverse mortgages, which are private loans that are backed by the companies that develop them.
Single-purpose reverse mortgages generally have very low costs. But they are not available everywhere, and they only can be used for one purpose specified by the government or nonprofit lender, for example, to pay for home repairs, improvements, or property taxes. In most cases, you can qualify for these loans only if your income is low or moderate.
Reverse mortgage loan advances are not taxable, and generally do not affect Social Security or Medicare benefits. You retain the title to your home and do not have to make monthly repayments. The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence. In the HECM loan, a borrower can live in a nursing home or other medical facility for up to 12 months before the loan becomes due and payable. The loan is subject to forclosure for failure to pay taxes and insurance, to maintain the property and comply with loan terms.
HUD disclaimer: This material is not from HUD or FHA and has not been approved by HUD or a government agency," homeowners' responsibilities under the terms of the loan (stay current on taxes, insurance and keeping the home maintained.) Homeowners will have to meet the financial assessment requirements based on income & credit requirements."
(The couple in the photo is not the actual borrowers)
"This ad is not from HUD or FHA and was not approved by HUD or any government agency."
Ainsworth Financial Mortgage Corporation