Is A Reverse Mortgage Proper For You?
June 1, 2021
We recently wrote an article about how cheap state and federal inheritance and gift taxes can make it the right time to give your loved ones a great gift. The same can be true when considering a reverse mortgage loan.
In the current Connecticut real estate market, real estate values continue to rise. In addition, ratings are getting higher, meaning seniors can now get more funding from a reverse mortgage. If you already have a reverse mortgage loan, you should consider refinancing the loan.
Reverse mortgages remain one of the most misunderstood tools for retirement planning and long-term planning. Many myths surround the reverse mortgage program. Questions you may have are:
1. Will the bank own my property? NO! You remain the owner of a mortgage.
2. Will the monthly payments be high? NO! There are no monthly payments, just payments that you pay now, for example: property tax, home insurance, etc.
3. If I die soon after receiving the reverse mortgage, will the bank get my property and not my family? The bank does not receive a stroke of luck. The mortgage must be paid and the rest goes to your family and / or estate.
Reverse mortgages allow homeowners who are 62 years or older to borrow money for their home. The homeowner receives an amount of money from the lender, which is largely based on the value of the house, the age of the borrower and the current interest rates. The loan does not have to be paid back until the last surviving homeowner dies, sells the home, or moves out for good. Homeowners can use reverse mortgage money to pay for improvements to their home, allow them to defer social security, or pay for home health care.
The most widely used reverse mortgage product is Home Equity Conversion Mortgage (HECM), the only reverse mortgage program insured by the Federal Housing Administration (FHA). The national limit on the amount of credit a homeowner can borrow is $ 822,375.
Seniors with more expensive homes have an increased opportunity to get a jumbo reverse mortgage to raise cash for retirement. As the previous real estate market improved, jumbo reverse mortgages became popular.
High-end borrowers need to watch out for the jumbo reverse mortgage which has no credit limits set. Jumbo reverse mortgages enable seniors to borrow millions of dollars. Qualified borrowers can raise up to $ 4 million in loan proceeds.
Reverse mortgages are “non-recourse” loans; even if the home is eventually sold for less than the reverse mortgage amount, the seller never owes more than the home’s value. How much money seniors can receive depends on their age and the quality of their homes; the older you are, the more you can qualify.
John Luddy, Senior Vice President of Reverse Lenders at Norcom Mortgage, noted that one of the more compelling reasons to use a reverse mortgage is to pay for home care in order to stay away from a nursing home. He has also pointed out that hopefully by using a reverse mortgage to pay for home care you will not have to tamper with your own retirement accounts, which may jeopardize your own ability to meet your future health needs.
A reverse mortgage may not be the right move for everyone. Talk to a legacy law attorney about whether a reverse mortgage is right for you. A reverse mortgage can be the answer to get you through these troubled times.