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Reverse MortgagesWhat is a reverse mortgage? A reverse mortgage is a home loan (used for any purpose) where senior homeowners, 62 and older, can access the equity (cash) built up in their home into tax free income without selling the home, giving up title or making monthly mortgage payments. That right, you can borrow against the equity that you have built up in your home without repaying the mortgage loan so as long as the borrowers live in the house. A reverse mortgage pays you regardless of your current income. You can borrow all of the money at once, receive a monthly payment or set up a line of credit to draw upon. You do not make any payments until the house is sold, you no longer use the house as your primary residence or the home is in your estate. Your heirs can payoff the mortgage loan simply by refinancing the house with a typical mprtgage loan. You can have the piece of mind knowing that your heirs have no personal liability for the repayment of the mortgage loan, relax knowing that you do not have to make a payment on the mortgage loan so long as you occupy your home as your principle residence and receive the tax free income from the cash advances. There are several different reverse mortgage programs. Fannie Mae Home Keeper®, Jumbo Cash-Out loan, and the HUD-insured Home Equity Conversion Mortgage (HECM) are three such programs. As demand increases, more reverse mortgage programs from different organizations will become available. It is called a reverse mortgage because you borrow money from a lender, but the lender makes monthly payments to you, rather than you making monthly payments to the lender. All interest is paid at the end of the loan, rather than in the beginning.
What are some of the benefits of a reverse mortgage? - Strengthen your personal and financial independence.
- Help pay for health care or other needs.
- You can never lose your home in foreclosure as long as you maintain the property tax and insurance payments.
- The loan is only paid off when the house is sold by you or your heirs, or all borrowers move out of the house.
- Keep your Medicare or Social Security benefits.
- Use it as a credit line and draw upon it as needed.
- Get all your cash right away.
- Get the best of both—get cash now and have a balance in reserve to use as a credit line.
- No Income Requirements: The homeowner does not need to be working and is not qualified based on income.
Eligibilty Requirements. There are no income, employment or credit qulaifications. All homeowners must be age 62 or olderAny existing mortgage must be paid off by the reverse mortgageThe property must be a single family or a two-to-four unit dwellingTownhomes, detached homes, condominium units, planned unit developments (PUDs) and some manufactured homes are eligible.The home must meet HUD minimum proprty standards.As the homeowner receives monthly cash income, the loan balance increases. In the following twelve-month example, the homeowner begins with a debt-free home. As money is received by the homeowner, the mortgage grows. By the end of month twelve, the homeowner owes the bank $6,000 plus $232.44 interest. All Reverse Mortgage loans have a variable rate.
Assumptions* | Regular monthly advances | $500 | | Annual interest rate | 7.0 % | | Monthly interest rate | .583% (.07 / 12) |
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| 0 | 0 | 0.00 | 0.00 | $500.00 | | 1 | $500.00 | $2.92 | $502.92 | $500.00 | | 2 | $1,002.92 | $5.85 | $1,008.77 | $500.00 | | 3 | $1,508.77 | $8.80 | $1,517.57 | $500.00 | | 4 | $2,017.57 | $11.77 | $2,029.34 | $500.00 | | 5 | $2,529.34 | $14.75 | $2,544.09 | $500.00 | | 6 | $3,044.09 | $17.76 | $3,061.85 | $500.00 | | 7 | $3,561.85 | $20.78 | $3,582.63 | $500.00 | | 8 | $4,082.63 | $23.82 | $4,106.44 | $500.00 | | 9 | $4,606.44 | $26.87 | $4,633.31 | $500.00 | | 10 | $5,133.31 | $29.94 | $5,163.26 | $500.00 | | 11 | $5,663.26 | $33.04 | $5,696.29 | $500.00 | | 12 | $6,196.29 | $36.15 | $6,232.44 | $500.00 |
*Many criteria are considered when determining the reverse mortgage loan amount, interest rate, etc.
 Lend Select Mortgage LLC - 1317 Route 73, Suite 201 - Mount Laurel, NJ 08054 Office Phone: (856) 866-5555 Fax: (856) 866-5656
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*Rates subject to change at any time without notice.
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