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Reverse Mortgage

Reverse Mortgage

Live in Your Home as Long as You Like

Reverse Mortgages can allow you to live in your own home as long as you like without having to continue to make a mortgage payment and possibly have your home start to pay you with extra income, depending on how much equity you have. If you’re 62 or older, talk to our home loan experts about matching your dreams for the future with today’s best reverse mortgage rates. We will work with you and Reverse Mortgage Counselors to help you to understand the whole process and how it affects you and your family. 

What is a Reverse Mortgage?

Reverse mortgages were originally created in the 1980s to help Americans age 62 and older convert part of the equity in their home into money that could be used during retirement. Recent changes to the program have made it a more effective way for eligible homeowners to gain greater financial flexibly while maintaining ownership of their home.

You can choose to receive your reverse mortgage proceeds as a line of credit, lump sum payout, monthly payments, or a combination of these. Unlike a traditional mortgage or home equity loan or home equity line of credit, you are not required to make any monthly mortgage payments. You will still be responsible for property taxes, maintenance, and insurance. As long as you meet those responsibilities, the loan balance is not due until the last remaining homeowner no longer uses the home as their primary residence, or the home is sold.

What’s New? 

You might be familiar with reverse mortgages. But recent changes and new program guidelines make the New Reverse Mortgage worth reconsidering as part of your comprehensive retirement plan.

It’s safer for you 

New loan limitations help preserve your home equity funds for a longer period of time. Plus, mandatory mortgage insurance provides additional protection.

Rates and fees are lower than you might expect.* 

With the low fee and interest rate options offered by many lenders, today’s reverse mortgage may compare favorably with a traditional home equity line of credit or home equity loan alternative.**

Financial advisors have discovered new ways of using a reverse mortgage line of credit

With its growth feature and new options that reduce up-front costs, the line of credit option can be used in new ways as part of a long-term retirement funding strategy. It can help reduce portfolio spend-down risk, and help your savings last longer. It may provide more security and control than a traditional home equity line of credit.

How Can I Use the Proceeds?

Today, more homeowners and financial planners are using reverse mortgages as a key part of their long-term retirement strategy. Here are some smart ways to use the New Reverse Mortgage to help meet your retirement goals:
  • Pay off a traditional mortgage, to eliminate monthly mortgage payments***
  • Make retirement savings last longer
  • Preserve investment accounts during market downturns with a “standby” line of credit****
  • Supplement income with monthly tenure payments
  • Use a line of credit to build a safety net for emergencies, home repairs, and healthcare expenses
  • Afford to retire earlier, or else wait until later to maximize lifetime Social Security benefits+
  • Buy a home that better fits your needs++
  • Support “aging in place” expenses, including caregiving and home modifications.

*Rates and fees vary by lender.
**Source: www.mybanktracker.com/heloc
***A reverse mortgage is a home-secured debt that must be repaid at maturity.
**** “Reverse Mortgages: What Advisors Should Know,” by Paul Norr, www.bankinvestmentconsultant.com, April 21, 2014.
Research at Texas Tech University and elsewhere suggests that the current structure of reverse mortgages may help stabilize retirement income. One powerful application is using the reverse mortgage line of credit option as a Bear Market Standby Account.
Shaun Pfeiffer, Ph.D.; John Salter, Ph.D., CFP®, AIFA®; Harold Evensky, CFP®, AIF®, “Increasing the Sustainable Withdrawal Rate Using the Standby Reverse Mortgage,” Journal of Financial Planning 26 (12): 55–62.
+Source: www.ssa.gov/retire2/delayret.htm

++A significant down payment is required to purchase a home with a reverse mortgage.


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