Before you say “NO,” read on and keep an open mind. A Home Equity Conversion Mortgage, also known as a reverse mortgage, is a Federal Housing Administration-insured loan which enables you to access a portion of your home’s equity to obtain tax-free funds without having to make monthly mortgage payments.
This innovative program helps seniors use the equity from the sale of their previous house to fund the purchase of their next home. Reverse mortgages are also used by people who want to age in place and free up equity so they can enjoy a comfortable lifestyle.
If you are age 62 or older and have sufficient equity, you may be able to get cash to:
- Pay off existing mortgages
- Continue to live in your home and retain title
- Pay off medical bills and other debts
- Improve your monthly cash flow
- Fund necessary home repairs
- Build a “safety” net for unplanned expenses
“A reverse mortgage is not for everyone” according to Mortgage professionals. The home must be your primary residence and you must still pay property taxes and insurance.
If it is an option, you will enjoy the following benefits:
- You can continue to live in your home and retain title
- Eliminate your existing monthly mortgage payments
- Loan proceeds are tax-free and can be used any way you choose
- Your heirs inherit any remaining equity after paying off this loan
Naturally, I highly recommend you seek professional counsel from someone who’s familiar with this type of loan, such as your CPA, financial planner, elder law attorney or a loan officer who specializes in this program.
The best way to determine if a reverse mortgage is “right” for your unique situation is to investigate.
