Is a Reverse Mortgage the right answer for you or a loved one? Get the facts.
H ome is a special place. Whether it s been in your family for generations or you ve lived there only for a short time, you probably have all kinds memories and emotions associated with it. For most of us, it is our biggest financial investment. And, for homeowners aged 62 and over who own it outright or who have built up equity over the years, it may be one of the most overlooked sources of extra income. A Home Equity Conversion Mortgage (HECM), commonly known as a Reverse Mortgage, can be a sensible part of retirement and financial planning, allowing homeowners to utilize the equity they have built up in their home while also allowing them to remain there, enjoying their golden years. Funds from a Reverse Mortgage can allow homeowners to supplement income, prepare for the future, reduce debt, assist family members, travel, and more. Home is a special place. Any financial decision involving your home is not one to be taken lightly. Before making a decision, it s important for you to get the facts from a respectable, reputable mortgage professional. Additionally, you may also choose to involve other trusted advisors, such as financial planners, estate attorneys, and even your family. Once you have all of the information, you can determine if a Reverse Mortgage is the right financial tool to meet your unique needs.
What is a Reverse Mortgage? A Reverse Mortgage, or HECM, is a unique loan which enables homeowners, age 62 and older, to convert part of their equity into tax-free* income without having to sell their home, give up title, or take on a new monthly mortgage payment. One way to think of a Reverse Mortgage is that it is the opposite of a traditional mortgage. With a traditional mortgage, you borrow money and make monthly payments back to the lender. As you make payments, the balance of your loan declines while your equity in the property increases. With a HECM, the lender pays you and the loan balance increases while the equity declines. You are using the equity in your home to supplement your income. You do not make monthly payments on a Reverse Mortgage; the loan is repaid when you permanently leave or sell your home. *Please consult with a financial or tax advisor for specifics.
Common Questions about Reverse Mortgages Because a HECM is such a unique loan program, many homeowners and even some financial professionals misunderstand how it actually works. Additionally, the programs in existence today are different than the Reverse Mortgages that were around decades ago. Today s loans are more secure and offer more benefits to the borrower. The important thing to remember is that if you ever have a concern or if something seems unclear to you, don t hesitate to ask about it. At Mount Vernon Mortgage, we take pride in taking the time to ensure that you understand the process and are comfortable with the decision you are making. Can the lender take my house? No. You retain full ownership of your home, as you would with any mortgage. A Reverse Mortgage is simply a loan. Can I end up paying back more than my home is worth? No. The borrower will never pay back more than the home s market value, even if its value drops below the loan amount. Can I be thrown out of my house? No. You will not be forced to move as a result of circumstances tied to a Reverse Mortgage, but certain things can trigger repayment: you sell the home/transfer the title, you don t occupy the home, you pass away and no other borrower is on the title, or you fail to maintain the home, pay property taxes, and insure the home.
How will my family feel about a Reverse Mortgage? When a Reverse Mortgage makes sense, experience shows that families (and heirs) actually favor them. A HECM allows you to stay in your home, retaining it as an asset. Should the home need to be sold, the borrower will not have to pay back more than the home s value; any proceeds from the sale, after the mortgage payoff (principal, interest, and fees such as closing costs), will go to you or your estate. Will a Reverse Mortgage affect my Social Security and Medicare benefits? No. Your regular Social Security and Medicare benefits are not affected by funds you receive from your Reverse Mortgage. The IRS views these funds as a loan, not as income. Other government benefit programs such as SSI, Medicaid, and other types of public assistance may have certain program restrictions. It is recommended that you consult your tax advisor to ensure that you are compliant with these programs so you do not put your financial situation in jeopardy. Can I get a Reverse Mortgage if I ve had credit problems? Yes. Because you are not making monthly payments on the loan, there are no credit or income requirements for a HECM.
What are some of the features of a Reverse Mortgage? Many features of a Reverse Mortgage make it an attractive financial tool for homeowners and an excellent alternative to other options. No restrictions on how the money can be used. No income, medical, or credit qualifications. No monthly mortgage payments. No repayment of the loan until the last borrower passes away or vacates the home for one full year. Non-recourse loan; no additional debt is left to the borrower. Loan proceeds are tax-free and may be tax-deductible upon repayment.* Social Security and Medicare eligibility are not affected. To protect homeowners, all Reverse Mortgage borrowers are required to undergo third party, HUD-approved counseling prior to loan approval to ensure that they understand the loan program. *Please consult with a tax advisor for specifics.
What kind of property is eligible for a Reverse Mortgage? First and foremost, the property must be owner-occupied and must be the homeowner s primary residence. That said, the home can be any of a variety of types of property including: Single Family Home Condominium (with FHA approval) 2-4 Family Home Planned Unit Development How much money can I get and how are the payments made to me? The main factors which determine the amount of funds available to you (Principal Limit) through your HECM are the following: Age of youngest borrower Lesser of: appraised value of home, FHA lending limit, sale price of the home Current interest rates Balance of existing mortgage (if applicable)
How can the money be used? There are no restrictions on how you use the money you receive from your Reverse Mortgage. Some ways that homeowners have used their funds include: Use as a financial planning tool (purchase life insurance or long term care insurance) Pay for hospital/healthcare costs, medical equipment, medications Repay existing mortgages and/or debts Supplement existing income Make home improvements, repairs, modifications Pay for in-home care Pay taxes and insurance Purchase a vacation home, boat, or RV Use for day-to-day living expenses Enjoy more travel, leisure activities, hobbies Use for gifts (family, charitable giving, etc.) There are no restrictions on how you use your money. Assist loved ones (down payment on home, educational expenses, etc.)
How is a Reverse Mortgage repaid? The Reverse Mortgage does not need to be repaid until the borrower/last-remaining borrower either passes away, sells the home, or vacates the home for one full year. Even then, there are options available for the owners and their family members: Pay off the HECM s principal, interest, and fees Keep the home in the family by taking out a traditional mortgage or by using other assets to pay for it Sell the home to repay the loan Borrowers won t have to repay more than the home s value. A Home Equity Conversion Mortgage is a nonrecourse loan. The borrowers will never have to repay more than the current market value of the home at the time of repayment or sale even if the home has depreciated in value during the time that the Reverse Mortgage was in effect. If there is money left over after the Reverse Mortgage has been repaid, it will go to the homeowners or to the homeowners estate to be used according to their wishes.
What types of Reverse Mortgages are there? Two types of Home Equity Conversion Mortgages (HECMs) exist to provide you with the flexibility to use your Reverse Mortgage in a way that works with your individual financial objectives. Each is a HUD/ FHA government-insured program and is subject to HUD lending limits for your geographical area. Your Mortgage Professional will work with you and advise you of your options. Home Equity Conversion Mortgage Fixed rate HECM Fixed rate maintains same interest rate throughout life of loan Payout is in one lump sum Adjustable rate HECM Adjustable rate adjusts monthly based on LIBOR (London Inter Bank Offered Rate) Several payout options include, lump sum, fixed monthly amounts, line of credit, and combinations of these Home Equity Conversion Mortgage for Purchase Buy a home without monthly mortgage payments One transaction using equity from sale of previous home Only one investment/down payment is made toward the purchase, no matter how long you live in the home or what happens with its value
Why choose a Reverse Mortgage? Research continues to show that Americans want to live in their homes for as long as possible. At the same time, we re living longer lives and financial security is of tremendous concern to older homeowners and their families. Traditional income sources may not be sufficient to cover living expenses or to allow homeowners to enjoy their lives to the fullest potential. 2011-2029: Approximately 8000 people turn 65 each day. Reverse Mortgages, or HECMs, are not new; they have been around for decades, evolving over time to meet the changing needs of our population. With so many Americans over 62, HECMs have moved to the forefront as a financial tool for homeowners 62 +. A HECM also helps homeowners maintain financial independence, diminishing the need to rely on family or other sources for financial assistance. Reverse Mortgages are safe. To protect homeowners from unethical lending practices, many safeguards including mandatory thirdparty counseling have been put into place. At Mount Vernon Mortgage, we will work with homeowners to determine if, in fact, a HECM is the right financial tool to meet their objectives. Other non-reverse Mortgage options may be presented; sometimes, the best option may not be a mortgage at all!
Why choose Mount Vernon Mortgage Corporation? At Mount Vernon Mortgage Corporation, we understand that Reverse Mortgage clients may have different goals, needs, and emotions associated with the mortgage process. Our Reverse Mortgage professionals are committed to helping homeowners 62 + make the decision that s right for them by discussing their needs, wishes, lifestyle, and other financial and estate plans before we present their options to them. This allows us to explain the merits of each program, based on the homeowners needs. Mount Vernon also offers a full range of mortgage programs not just Reverse Mortgages in the event that they are better suited to the homeowners needs. We endeavor to educate homeowners so they can make informed decisions and we welcome other financial decision-makers and advisors to be involved with the dialogue. We want homeowners to be completely comfortable that the choice they make is the right one. Mount Vernon Mortgage Corporation is local, serving the needs of Massachusetts homeowners since 1996. We have earned our reputation for putting the client first, educating homeowners about their options, and applying the highest ethical standard to all that we do. We would consider it an honor to work with you as you make this important financial decision.
Learning more about Reverse Mortgages Mount Vernon Mortgage Corporation has a demonstrated commitment to education and structures both formal and informal Reverse Mortgage learning programs to meet your specific needs, for a large or small group or even one-on-one. Programs can be customized and geared toward homeowners and their families, financial professionals, attorneys, senior service providers, and more. It is our pleasure to plan a learning program specifically for you or your group; please contact us and we will discuss your needs and those of your audience so we can present the best program to meet those needs.
How to contact Mount Vernon Mortgage Corporation for more information We would love to talk with you or meet with you! If you would like to learn more about Reverse Mortgages, please do not hesitate to contact us. Phone 781-337-2432 or toll free at 1-800-869-5882 Online www.mtvernonmortgage.com Mail Mount Vernon Mortgage Corporation 440 Washington Street Weymouth, MA 02188 Our Reverse Mortgage Advisors will do the best they can for you. Therefore, if you wish to meet in person, it is best to call ahead for an appointment.
Your first choice for mortgage financing throughout all stages of your life. 440 Washington Street Weymouth, MA 02188 Office: 781-337-2432 Toll Free: 1-800-869-5882 www.mtvernonmortgage.com/reverse facebook.com/mountvernonmortgage @MtVernonMort @MVMCReverse www.mvmcreverseblog.com We are committed to helping senior homeowners achieve financial security. Massachusetts Licensed Broker MB1492, NMLS1492 Copyright Mount Vernon Mortgage Corporation 2007-2014