How can loan proceeds be used?

Any way you choose!  It’s your money – there are no restrictions on its use.

  Eliminate monthly payments (i.e. mortgage and credit cards).
  Supplement your present income - fill the gap between your retirement expenses and retirement income.
  Fund medical expenses - pay for in-home or nursing home care for yourself or family member.
  Improve your home to ensure it is safe and secure.
  “Gift” monies to your children or grandkids for a start on their first home or perhaps for college tuition.
  Enjoy additional leisure activities - get to that "bucket-list".

What are the Benefits of a Reverse Mortage? PDF Print E-mail

Reverse Mortgages have been around for more than 40 years. But as any 40-something-year-old, they’ve seen lots of changes over time.

How can YOU benefit?
You have financial peace of mind and can maintain your independence.
You can live in your home for as long as you choose.
You never make a monthly payment.
Your home qualifies, not your personal income or credit score.
You and your heirs have no personal liability for repayment of the loan – only the home can stand for the debt under a “non-recourse” loan.
You retain ownership and control of your home – ownership is never given to the lender.
Your loan proceeds are non-taxable.
You decide how to receive your loan proceeds, and can change your election anytime through the life of the loan. Choose from: lump sum, line of credit, term, tenure, or any combination thereof.
If you elect a credit line, the unused portion of the credit line grows.
You can repay your loan at any time without penalty.

 

Innovative Uses of a Reverse Mortgage

Purchase long term care insurance.

Long term care insurance pays for necessary medical or personal care service provided outside of a hospital setting, such as in a nursing home or the policy holder’s home.  Many financial planner recommend that their clients purchase long term care insurance to help fund prospective medical and care costs.  Typically, neither Medicare nor Medicare supplemental insurance cover the cost of these services. 

Using  Reverse Mortgage to pay for long term care insurance can be an important part of asset protection for you and your heirs.

Purchase a life insurance policy.

Purchasing a policy can assure the legacy you leave retains its value.
Funding a life insurance policy through a Reverse Mortgage lowers your estate value subject to taxes.  Furthermore, a properly structured life insurance policy then pays out a benefit to heirs in tax-free dollars.

You can provide your heirs a guaranteed sum, providing greater control of your estate.  This may be especially desirable given the unknown nature of future real estate markets and property value at the time of your passing.

Postpone Collecting Social Security

For young retirees, a Reverse Mortgage may be used to supplement income and forestall initiation of social security payments that are then substantially larger at an older age.

 For example, a borrower who would have been eligible for $1700 monthly social security benefit at age 62 may be eligible for a benefit of $3100 at age 70.  Using a Reverse Mortgage for cash needs during the interim period can be extremely beneficial to the borrower.  While closing costs may seem expensive, the payback period is short (differs in each individual situation) compared to increased Social Security proceeds over a lifetime.

 

How does a Reverse Mortgage differ from a home equity loan?

While both loans enable you to turn equity into accessible dollars, you must make regular monthly payments (as soon as your loan is funded) to repay a traditional home equity loan.  Therefore, you must qualify for the loan based upon your income and credit.  If you fail to make timely payments, your lender can foreclose on you and you can be forced to sell your home.

With a Reverse Mortgage, you do not repay the loan until you no longer live in the home.  Your income is not considered when qualifying for the loans.  You cannot be forced to sell your home if you cannot make a payment since THERE ARE NO PAYMENTS!