What is a Reverse Mortgage

What is a Reverse Mortgage or Home Equity Conversion Mortgage (HECM) and how does it work? We will be happy to answer any questions you have about the pros and cons. We can show you example illustrations to explain how you can benefit the most.

We believe in trying our best to meet with you face to face. We can travel to all counties in Alabama, Tennessee and Georgia.

Some of the common ways to utilize the Reverse Mortgage are: home improvement, immediate cash needs, in home health care, paying off a mortgage to eliminate a monthly payment, and supplementing retirement income. Retirement plans rarely last until age 90-100.

Reverse mortgage loans are a way for older homeowners to convert their home’s equity into tax-free cash without having to sell or move. The Reverse Mortgage is insured by the U.S. government, the Department of Housing and Urban Development (HUD) through the Federal Housing Agency (FHA).

Qualifying homeowners can choose to receive tax-free payments from reverse mortgage lenders either monthly, in a lump sum, or as a line of credit.

The mortgage is not repaid until the senior passes away or leaves the home. You can leave your home to anyone or charity that you chose. At that time, your heir has 12 months to decide what they want to do with the property. Commonly it is sold, the mortgage is paid off, and the remaining equity belongs to your heir.

There is no prepayment penalty. You can pay off the mortgage at any time you like. The Reverse Mortgage has FHA insurance that protects against the home not being worth enough to pay back the loan. You don’t need to worry about passing a debt to your heirs. The insurance will pay the difference if that becomes the case. The property stands as sole collateral for the loan.

The home owner continues to pay homeowner’s insurance and property taxes on the house. If you are exempt from property taxes, you will remain exempt. If you are not exempt, make sure you check to see if you qualify.

Social Security and Medicare benefits are not affected. There are no income tax requirements. The equity is not considered income.

The Home Equity Conversion Mortgage (HECM) is the only reverse mortgage that is insured by the Federal Housing Administration (FHA). If this program is not right for you, we can also assist you with other options. We would love to answer your questions. We look forward to working with you. Call us today!