Jim Fink

Common Questions about Reverse Mortgages

With the economy in decline, more seniors like you are viewing their homes as a source of retirement funds. You’ve spent decades paying for your home, and now it’s time to let your home see you through the coming years. However, many people are concerned about reverse mortgages. Here are answers to a few of the most common questions about these powerful retirement tools:

Where Does the Money Come From?

A reverse mortgage is similar to a home equity loan. In order to qualify, you must have equity in them home, although you’re not required to own the home outright. The loan amount depends on several factors including your age and amount of equity. You cannot borrow more than the home is worth because the loan is guaranteed by the home, as with any other mortgage.

Can the Lender Take My Home?

You retain title to the home and are responsible for insurance and upkeep. As long as you maintain the home, the lender cannot take it from you. The loan isn’t due until you permanently leave your home, at which point you or your heirs can sell the home to repay the loan, or find an alternative source of funds and keep the home.

How Will I Receive the Money?

You can choose to receive a lump sum or monthly payments. The amount for each monthly payment is determined by the loan amount and the loan term.

Are There Limits to How I Can Use the Money?

Reverse mortgage funds are your money. Just like any other home equity loan, you can use it for anything you want. Many seniors use the funds to pay off any remaining balance on their traditional mortgage. Funds are also used for dream vacations, healthcare, gifts to children and grandchildren, or to simply make daily life more affordable.

Can I Owe More than the Home is Worth?

Unlike a traditional mortgage, you can’t be “upside down” in a reverse mortgage. If your home is worth less than the loan amount when you permanently leave your home, the lender will receive the current value of the home. You or your heirs will not be required to repay the difference.

As with any mortgage, you should carefully consider all of your options before agreeing to a loan. Contact a reputable lender like Financial Freedom to discuss your concerns. You should also discuss your intentions with your children, to alleviate any fears they may have about your plans. Once they understand how the loans work, many children are happy their parents have found a new source of retirement income. It’s your house. Isn’t it time you put it to work for you?

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