What is a Reverse Mortgage?

It’s a home loan that enables you to convert a portion of your home equity into tax-free¹ funds without having to sell your home, give up title, or take on a new monthly payment.
There are no income, employment, medical or credit score qualifying restrictions.²
Receive payments instead of make them.
In a forward mortgage, you use your debt to turn your income into equity. In a reverse mortgage you use your debt to turn your equity into income.
Then you had income and wanted equity. Now you have equity and want income. In both cases you used your debt to accomplish your financial goals.

1. Consult a tax advisor.
2. Reverse Mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. Family members are also strongly encouraged to participate in these informative sessions.

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Why would I choose a Reverse Mortgage?

Security – You retain title and ownership of your home.
Flexibility – Obtain your loan proceeds in a lump sum, in monthly installments, as a line of credit, or any combination of the three.
Choice – You can change payment plans as many times as you wish.
Peace of Mind – Enjoy a more comfortable retirement in your own home. Mortgage insurance ensures that you will never owe more than the value of your home.

Reverse Mortgages provide capital for...

Long- Term Care
Grandchildren’s Education
Charitable Giving
Supplemental Monthly Income
Insurance
Estate Planning
Medical Expenses
Funding Trust
And more…

Age & Eligibility Requirements

You must be at least 62 years old.
Your home must be your primary residence.
You must own your home free and clear or
Your home debt must be paid off with Reverse Mortgage proceeds.
Educational counseling with a HUD-approved counselor is required.

Client Case Study

Clients are 64 years of age
Clients currently owe $160,000 mortgage.
Total mortgage monthly payment is $960 per month at 6%
New Reverse mortgage for $256,000
Net funds available $73,000 (available as lump sum, line of credit, or monthly installments of $392 per month)
Monthly premium for universal life policy 250K - $460 per month
Total monthly cash flow savings as much as $892 per month!

When do you pay it back?

When the last surviving borrower dies, sells the home, or permanently moves away. "Permanently" generally means you have not lived in your home for 12 months in a row.
You might also have to pay it back if you fail to pay your property taxes, fail to keep up your homeowner's insurance, or let your home go to waste. But if you do, the lender may be able to make extra cash advances to cover these expenses.
Just remember, reverse mortgage borrowers are still homeowners and therefore are still responsible for taxes, insurance, and upkeep.

What is the most you can owe?

You can never owe more than the value of the home at the time the loan is repaid. Reverse mortgages are generally "nonrecourse" loans, which means that in seeking repayment the lender does not have recourse to anything other than your home. Not your income, your other assets, or your heirs.
So even if you receive monthly loan advances until you are aged 115, your home declines in value between now and then, and the total of monthly advances becomes greater than your home's value - you can still never owe more than the value of your home. If you or your heirs sell your home in order to pay off the loan, the debt is generally limited by the net proceeds from the sale of your home.

How do you pay it back?

If you sell and move, you would most likely pay back the loan from the money you get from selling your home. But you could pay it back from other funds if you had them.
If the loan ends due to the death of the last surviving borrower, the loan must be repaid before the home's title can be transferred to the borrower's heirs. The heirs could repay the loan by selling the home, using other funds from the borrower's estate or their own funds, or by taking out a new forward mortgage against the home.

What is the total cost (TALC)?

Federal Truth-in-Lending law requires reverse mortgage lenders to disclose the projected annual average cost of these loans in a way that includes ALL of the costs and benefits, and also takes into account the nonrecourse limits.
This Total Annual Loan Cost (TALC) disclosure shows you what the single all-inclusive interest rate would be if the lender could only charge interest and not charge any other fees. Specifically, it tells you the annual average rate that would produce the total amount owed at various future points if only that rate were charged on all the cash advances you get that are not used to pay loan costs. In other words, it shows you what you are paying in total for the money you get to spend.

How does the total cost (TALC) vary?

On any loan with a given pattern of loan advances, TALC rates depend on two major factors: time and appreciation.
TALC rates are generally greatest in the early years of the loan and decrease over time, for two reasons 1) the initial fees and costs become a smaller part of the total amount owed, and 2) the likelihood increases that the rising loan balance will catch up to - and then be limited by - the nonrecourse limit.
TALC rates also depend on changes in a home's value over time. The less appreciation, the greater the likelihood will be that a rising loan balance will catch up to - and then be limited - by the home's value. On the other hand, when a home appreciates at a robust rate, the loan balance may never catch up to (and be limited by) it.

What does TALC really mean?

If you end up living in your home well past your life expectancy or your home appreciates at a low rate, you might get a true bargain. But if you die, sell, or move within just a few years or your home appreciates a lot, the true cost could be very high.
There's no way of avoiding this fundamental risk. You just have to understand it in general, assess the potential range of TALC rates on a specific loan, and decide if it's worth the benefits you expect you'll get from the loan.
Just remember, TALC rates are not really comparable to the Annual Percentage Rates (APRs) quoted on "forward" mortgages because:
Unlike APRs, TALC rates include all the costs
Unlike APRs, TALC rates do not assume you take all of the loan on the first day (if they did, TALC rates would be much closer to APRs)
It's also important to remember that you get benefits from a reverse mortgages that you don't get from a "forward" mortgage:
No monthly repayments, and no repayment of any kind for as long as you live in your home
An open-ended monthly income guarantee, or a guaranteed creditline (which may grow larger until you use it all)
A total debt limit equal to the net value of your home(even if it's less than what your loan balance would otherwise have been), no matter how long you live, and no matter what happens to the value of your home
So you may pay more for a reverse mortgage. But the benefits are not available on any other type of debt. And - if you live long, or if your property value doesn't grow much - you can end up with a lower than expected cost.

How do I apply for a Reverse Mortgage?

Click here to fill out our easy application form and we will get back to you within one business day!
or call us today at 302.234.4129 today.

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