Reverse mortgages are designed for homeowners age 62 or older who wish to take advantage of the equity in their home, while occupying it as a primary residence.
What makes it a reverse mortgage? Unlike a traditional mortgage in which you pay the bank each month, with a reverse mortgage the bank pays you. It helps you take advantage of the appreciated value of your house by serving as a loan that unlocks the equity in your home. Choose from monthly payments or a line of credit that you can access whenever you need money. For many, it's a way to continue to live in your home while paying for the home healthcare you require.
It's safe, convenient, and there will be no surprises. The reverse mortgage offered through our reverse mortgage lender, the Home Equity Conversion Mortgage (HECM), is insured by the FHA (Federal Housing Administration). It's a secure way to gain access to additional funds, which you may need if you're living on a limited income.
Whether you're considering a reverse mortgage for yourself or for a loved one, we're here to help you with the process so you can meet your goals. With a reverse mortgage, you can live better in your golden years. Call us today, and we'll get started on an individualized plan to match your specific needs. To learn more, contact Sylvia Patterson, NMLS# 528441 at (203) 458-5414 or Kathy Duncan, NMLS# 844014 at (203) 458-5422.
Disclosure: This is a third party product and will not be underwritten, funded or serviced by the Bank. This material is not from HUD or FHA and has not been approved by HUD or a government agency.
A reverse mortgage is a loan available to people age 62 or older that enables a borrower to convert part of the equity in their home into cash.
Reverse mortgages were conceived as a means to supply funds to retired or soon-to-retire individuals with limited income. Homeowners can use the money they have put into their home to pay off debts such as traditional mortgages, to cover monthly living expenses, or to pay for health care. There are no restrictions on how the money can be used.
The loan is called a reverse mortgage because the traditional mortgage payback stream is reversed. Instead of making monthly payments to a lender, as you would with a traditional mortgage, the lender makes payments to the borrower. The borrower is not required to pay back the loan until the time when the home is no longer the primary residence of the last remaining borrower.
The amount of funds you receive depends on the age of the youngest borrower, the value of the home, the interest rate, and upfront costs. The older you are, the more proceeds you can receive.
The funds can be delivered to you as a lump sum, as a line of credit, or as fixed monthly payments, either for a fixed amount of time or for as long as you remain in the home. You can also combine these options. For example, you can take part of the proceeds as a lump sum and leave the balance in a line of credit.
Your final loan balance consists of the amount borrowed, plus annual mortgage insurance premiums, servicing fees, and interest.
You can use the money for anything you choose, from daily living expenses and home improvements to healthcare expenses or enhancing your retirement years. For many people, the money provides a financial security blanket for unexpected expenses.
As with a regular mortgage loan, there are closing costs involved with a reverse mortgage. These fees can be financed into the loan and typically include the cost of the appraisal, title insurance, loan origination, and recording fees. We'll provide you with a good faith estimate of the costs involved.
Your only out-of-pocket expenses will be the counseling fee and the appraisal fee. However, both fees can be paid out of the loan proceeds should you choose to do so.
No. This is a common misconception that stops many senior homeowners from taking advantage of a reverse mortgage. The borrower will retain title to the home just as they would with a traditional first mortgage or equity loan.
In addition, the homeowner remains responsible for the payment of all property expenses such as taxes, insurance, and association dues, as well as the well-being of the home.
The reverse mortgage becomes due and payable when the borrower permanently leaves the home—whether they move, sell the home, or pass away. Reverse mortgages are typically repaid from the proceeds of the sale of the home, with any remaining equity staying with the homeowner or their heirs. If a spouse passes away and the surviving spouse is on the reverse mortgage loan as well, they will continue to receive the full benefits of the reverse mortgage, with no repayment until deciding to permanently leave the home assuming all obligations under the loan are met.
Your reverse mortgage becomes due when the last surviving borrower on the loan passes away, moves from the home permanently, or does not occupy the home for longer than 12 consecutive months. Depending on the type of reverse mortgage you received, you or your heirs may be eligible for time extensions ranging from six months to one year. These extensions provide time to sell the home or obtain a new loan to pay off the balance of the reverse mortgage. If the home is sold for more than the balance of the reverse mortgage, the proceeds from the sale are yours to keep.
You will be responsible for payment of your property taxes and insurance on your home. It is important that your taxes and insurance be kept current at all times, as they could result in a default on your mortgage if they are left unpaid.
If you're interested in a reverse mortgage for yourself or a loved one, contact Sylvia Patterson at (203) 458-5414.