What A Reverse Mortgage IS NOT
A Reverse Mortgage is NOT a Sale:
The deed is still in your name. The bank never owns the house and has no say as to what you do with the house as long as you keep it insured, pay the taxes, maintain it, and of course, live there. If you want to remodel it, paint it a different color, or even sell it, you are the one in control because your name is on the deed — just like it is now.
A Reverse Mortgage Gives You Tax-Free Money* But It Is Not Free Money:
The money you receive is required to be paid back when you permanently move out of the house along with interest agreed upon in the beginning. The difference is that YOU will not be required to pay the loan back out of your money or your estate’s money. It will be paid back by equity in the house, which may increase with inflation over time. If it does not, the mortgage insurance which is built into the loan, one of FHA’s requirements, will be responsible for the pay-off if your home does not have enough equity. You will not be required to pay more on the loan than what your home value is worth, no matter what the time period or economic conditions at the time you want to move or sell the home. However, should your heirs want to keep your home, they may purchase it for 95% of the current appraised value.**
A Reverse Mortgage is NOT a Lifetime Commitment:
You can move whenever you want. As a lender, we cannot ask you to ever move or sell your home earlier than you want to as long as you continue to pay your taxes and insurance and maintain the home. We have to honor that commitment for life or as long as you live in your home. However, you are allowed to change your mind and sell the home whenever you want if you wish to move to a warmer climate, a smaller home, or closer to your children — whatever your choice may be. Only you will make that decision, not the lender or the government.
The HECM FHA Program is NOT a Failed Government Program or One that Costs the Taxpayers Money and Adds to the Deficit:
The HECM program is what is called in government-speak “Revenue Neutral.” That means the guarantees are authorized by the government, but the costs are paid by FHA mortgage insurance premiums, which are part of every loan that is done and paid out of the equity of the home. The taxpayers do not fund the program; it is simply made possible by the Federal Housing Administration, which monitors lenders to make sure seniors are being treated fairly and equitably.
NOTE: While Fairway as the lender does loan the money for the reverse mortgage loan, it is not affiliated in any way with any
government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency.
The HECM is NOT a Loan of Last Resort for the Poor:
Many folks think a reverse mortgage should only be used when all other accounts and options are exhausted. This could not be further from the truth. While it is a great loan product which may help a senior who may be facing foreclosure or other hard times, talk to your financial planner how using a reverse mortgage loan at an earlier age may work with your overall retirement needs, along with helping you “age in place.”
*This advertisement does not constitute tax or financial advise. Please consult a tax and/or financial expert for your specific situation. **There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.
What A Reverse Mortgage IS
A Loan that Converts Equity to Cash for Many Different Uses
A reverse mortgage can enhance your cash flow and/or pay off (refinances) your current mortgage when mortgage payments are no longer as easy to make. You are still required to pay property taxes and homeowner interest, and maintain the home, however. As mentioned in the last section, the primary reason to use a reverse mortgage should be proactive, not reactive to a cash flow problem. When things are good, it is a great time to get a life preserver in case the financial waters get rough later in life.
Use for Lengthening or Increasing Retirement Cash Flow
Everyone likes a raise so you can do some of the things that are fun and create memories that you will be glad to have at the sunset of life. It is sad when folks sit at home on top of thousands of dollars in equity and miss vacations, grandchildren’s college graduations, or even a dinner out because the budget is too tight. No well-meaning child would ever ask you to pinch pennies so they could have a larger home equity inheritance when you pass away. They would rather have you enjoy life with them. Just ask them!
Opportunities that Need Cash NOW*
In any rough economic times, there are many things that you can take advantage of if you have cash. You can purchase a vacation home in Arizona or a condo in Florida when you see below market prices! You could help a grandchild save their home from foreclosure or help them with college as costs soar over $20,000 per year at public universities. Think about it – if you had an extra $100,000 in your hand today, whom could you give it to, or what else could you do with it? With your wisdom and experience, we know you can think of lots of options. *Consult your tax advisor regarding potential tax implications and your specific situation.
Legacy for Charity or the Next Generation*
If you work with a professional financial advisor in the life insurance industry, you may find there are many products designed for those with excess cash, including some that may accomplish more than a paid-off house could by itself. Talk to your financial advisor about products that may be available to you and your specific situation. *This is not financial advice; please consult with your financial advisor about your specific situation.
Using the loan proceeds from a reverse mortgage loan, can potentially help all of your investments last longer. Talk to your financial advisor about how to incorporate this loan into your overall financial plan. Other ways a reverse mortgage loan can help with your overall cash flow is by bridging the Medicare gap between the ages of 62-65; and taking into consideration that the loan proceeds are tax free. *This is not tax or financial advice. Please consult your tax and/or financial advisor for your specific situation.
*This is not tax or financial advice. Please consult your tax and/or financial advisor for your specific situation.