Reverse Mortgages Provide Financial Security
By Paulette Wisch, Reverse Mortgage Manager
Universal Lending Corporation ~
Frank and Ramona retired from their jobs expecting their Social Security and pension checks would sustain a comfortable retirement. But about two years ago, rising healthcare costs, increased heating bills, and the need to replace a car left them wondering whether they could make it financially. After researching their options and discussions with their children, Frank and Ramona decided the best thing for them was an FHA-Insured reverse mortgage. Now, with their reverse mortgage they have a more reliable car, are receiving an additional $500 a month in income and have a Line of Credit of $30,000 for the bigger expenses that may arise – they have FINANCIAL SECURITY.
A reverse mortgage is a loan that enables senior homeowners to convert part of the equity in their home into tax-free income. Clients DO NOT give up title to their home and can sell and move at any time.
One of the biggest selling points of the reverse mortgage is its flexibility. The program allows senior homeowners to choose how they want to receive their mortgage funds:
- as a lump sum
- as a monthly income
- as a line of credit
- a combination of monthly income and line of credit
These funds can then be used at the homeowner’s discretion to pay for home repairs, medical costs, in-home care, education, travel, or simply to supplement retirement income. The program offers financial security and independence and as one of my customers told me “my doctor took me off blood pressure medication because the stress over money is gone”.
The amount available in a reverse mortgage depends on age, the type of reverse mortgage selected, the home value and current interest rates. Generally, the older you are, the more proceeds available.
The costs of taking out a reverse mortgage can be financed and are like those of regular mortgages and include origination and appraisal fees. Proceeds of a reverse mortgage are tax-free. The funds will not affect Social Security or Medicare and can be structured so that seniors on government assistance such as Supplemental Social Income, Old Age Pension, and Medicaid, among others can still get a reverse mortgage and their benefits will not be affected.
Before applying for a reverse mortgage, a meeting with an FHA approved housing agency is required. This meeting is designed as consumer protection to make sure basic program guidelines are understood before making a final decision to proceed. You can get a list of counselors near you from your local lender or the U.S. Department of Housing and Urban Development website www.hud.gov.
No monthly payments are required on a reverse mortgage during its term. It simply becomes repayable when the home is sold or vacated for other reasons. At the end, usually the house is sold for market value and the reverse mortgage is repaid. Any excess proceeds belong to the homeowner or the estate. The reverse mortgage loan is a “non-recourse” loan which means clients are guaranteed they will never leave a debt to their heirs.
Here’s how a reverse mortgage might work: A 65-year-old homeowner, has a home valued at $425,000 and owes $85,000. The reverse mortgage would pay off the current loan and the client would no longer have a monthly house payment. There would be additional funds in what FHA calls a Line of Credit (think of it as a savings account) available to use as desired and there is no restriction on use of funds.
A home is one of the most powerful assets people have during their lifetimes. A reverse mortgage is a reward of a longtime homeownership and a great opportunity for eligible seniors to enhance their financial situation.
Call Universal Lending, a local FHA Direct approved lender in business since 1981
Paulette Wisch, has 32 years of reverse mortgage experience. She can be reached at 303-759-7354 for a free no-obligation consultation or visit her website at pwischulc.com.