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Reverse Mortgages

Reverse mortgages are increasing in popularity with seniors across Denver and surrounding areas. If you are 62 years and older, you may qualify for this loan that converts your home equity into cash income. Contact Kathy Muni today to discuss your retirement plans.

So, what is a reverse mortgage?

A reverse mortgage is a way that homeowners 62 and over can access some of their housing wealth and put it to work for them. If there is a current mortgage, it will be paid off. And, there may be tax-free cash available at closing, a guaranteed growth line of credit, a monthly income stream, or a combination of these options. If you have no mortgage on your home, a reverse mortgage will provide access to substantial housing wealth! Of course, all homeowners remain responsible for property taxes, homeowner’s insurance and maintaining the home. 

The most popular reverse mortgage is a Home Equity Conversion Mortgage (HECM) which is government insured. For high value properties over $800,000 there are a variety of proprietary reverse mortgages. Call for all the details on this option. Whereas some lenders have on a few choices, at TFFReverse.com we can help you find the product that will best meet your goals. 

Qualifications

THE FACTS ABOUT REVERSE MORTGAGES

  • At least one borrower must be 62 or older.
  • It must be your primary residence.
  • You should have between 30% and 60% equity in your home depending on the age of the youngest borrower or non-borrowing spouse. 
  • You always own your home; the lender never does.
  • Loan proceeds are not taxable. (Check with your tax advisor.)
  • No monthly payments are required, and the loan comes due when the last borrower or non-borrowing spouse leaves the home permanently.
  • HECM counseling is required.
  • You may do a reverse mortgage whether or not you have a current mortgage.


Features

  • While you are still responsible for property taxes, homeowner’s insurance and maintaining the home, no monthly mortgage payments are required.
  • There are multiple options to convert your home's equity to support your financial goals, such as, receiving monthly payments, receiving a lump sum, or a line of credit that is guaranteed to grow and compound annually. 
  • Unlike a HELOC, the reverse mortgage line of credit cannot ne frozen, cancelled or called due and no monthly payments are required.
  • Loan proceeds are not taxable and do not affect Social Security benefits, Pension income and Medicare. 
  • If you are on Medicaid, a reverse mortgage can be very helpful to you. Call us for more details, then speak with your tax advisor.
  • A spouse who is under 62 years old may continue to live in the home without a mortgage payment as long as he/she chooses after the borrower has passed away.
  • Your estate or your heirs do not inherit any debt. This is a non-recourse loan meaning you can never owe more than the home is worth. 

Reverse Mortgage Home Eligibility

If yours is a single-family detached home, attached patio home, FHA approved condo or a condo over $500,000 whether FHA approved or not, a townhome, modular home, manufactured home if you own the land under it, duplex, triplex or quadruplex if you live in one of the units, or a hobby farm you may be eligible for a reverse mortgage.

HELOC vs HECM - What Are the Differences Between a Home Equity Line of Credit and a Reverse Mortgage Line of Credit?

A HELOC is the traditional way that people think about to gain access to some of your equity. You must qualify for the HELOC according to “forward lending” standards and then make payments when you begin to draw on it. A HELOC may be frozen, cancelled or called due when the lender sees fit as happened with several big banks during the Covid crisis. 

A reverse mortgage line of credit (HECM Line of Credit) on the other hand, is structured to be a benefit to seniors who are often on a fixed income. Social Security may be enough to qualify, and even bruised credit is often not a problem. The money you can access in this line of credit is guaranteed to grow and compound annually. You do not need to make a monthly payment if you access the HECM Line of Credit. However, if you chose to make a payment on your reverse mortgage loan balance, which is totally optional, the money will lower your loan balance and show up in your line of credit so that you have access to it again in the future.

History of Reverse Mortgages

The origins and history of reverse mortgages reveals a loan product that has evolved dramatically over the last 40 years.

The first reverse mortgage was written in 1961 when an elderly widow in Portland, Maine could not continue to live in her home without her late-husband’s income. He had been the high school football coach and was much loved. The local bank came to her aid by allowing her to remain in her home with no mortgage payment until she passed away. 

The need for reverse mortgages was further developed in the 1970’s with several private banks offering reverse-mortgage-style loans. These programs gave seniors money from their home but did not offer the protections we have today since no FHA insurance had been put in place. 

On February 5, 1988, President Ronald Reagan signed the FHA Reverse Mortgage bill into law. Since that time reverse mortgages have grown in popularity, especially since the issues that appeared through the late 1980’s and into the 1990’s, have been addressed. 

Reverse mortgages got a “black-eye” in those years and the myth surrounding them are still talked about today, but they are not true. For example, many think that if you do a reverse mortgage, the bank owns your home. This is a common myth. But it is not true. The bank never owns your home. Likewise, the bank does not keep the equity when you pass away. You will the property to your heirs and they decide what they always decide: Do they want to keep the home or do they want to sell it.  

Reverse mortgages have continued to grow in popularity as a safe, government-insured loan allowing you to access some of your housing wealth while not having to make a monthly mortgage payment.* 

Contact us TODAY for a no pressure, no obligation conversation. Get the information you need to make an informed decision. We educate; You decide.



*Homeowners are responsible for paying property taxes, homeowner’s insurance and maintaining the home.

 

Contact me today for your no-obligation reverse mortgage evaluation and quote.

 

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