A reverse mortgage allows qualified senior homeowners to access a portion of their home equity as cash. The loan proceeds can be used to help with the costs of aging in place and may also provide seniors with financial security in retirement. If you are considering remaining in your home in retirement, a reverse mortgage may be able to help you. However, your circumstances may change as you age. You might decide to sell your home and downsize or move to an assisted living community.
If you’re considering a reverse mortgage, but haven’t decided how long you want to stay in your current home, it might help to know that you can still sell your home if your plans change. Similar to a traditional mortgage, you will just need to pay off the loan when the home sells. As an added protection, if the value of your home is less than the amount owed on the loan, you are only responsible for paying back 95% of the appraised home value.
As long as you live in the home as your primary residence, continue to pay required property taxes and homeowner’s insurance, and maintain the home according to Federal Housing Administration (FHA) requirements, no mortgage payments are required with a reverse mortgage.1 In the case of selling a home with a reverse mortgage, the loan balance becomes due at the time the house is sold.
Once you decide to sell your home, contact your lender to get a payoff quote in writing. The document will tell you how much you owe on the reverse mortgage so you can be prepared to pay it off at closing. Once the house is sold and the loan is paid off, any remaining proceeds from selling the home are yours to keep.
If you are looking for options to increase your financial security as you age, a reverse mortgage may be right for you. To learn if a reverse mortgage could benefit your individual situation call 1 (800) 976-6211 to speak to a licensed loan advisor.
1 Failure to meet these requirements can trigger a loan default that may result in foreclosure