Reverse Mortgages for Inspiration & Lifestyle
You’ve been looking forward to retirement, and now that you’re here you wish you had more flexibility. Most of your Essential needs are met, and now you’re trying to budget for your… everything.
You’ve heard yourself say:
- “I want to go on adventures while I still can.”
- “My priorities have changed.”
- “Let’s be closer to our grandchildren.”
- “I want to help my kids buy their first houses.”
- “It’s time for major renovations so we can stay here comfortably.”
- “We’re so tired of paying this monthly mortgage!”
- “How can we be prepared for unexpected emergencies.”
- “This is my last house.”
- “Our kids will be alright.”
- “What if we can finally…”
At the bare minimum, a Reverse Mortgage will pay off your existing mortgage. Imagine what life would be like without the burden of mandatory monthly mortgage payments.
Some homeowners opt for a lump sum of cash. You are free to spend this however you wish.
In addition, some homeowners may also opt for a revolving Line of Credit. This is only available with the adjustable rate loan, and grows at an interest rate between 1.5-6.5%. These funds are only accessible after one-year, earning interest the entire time.
The final variable is a monthly stipend, which can be fine-tuned in partnership with the lump sum and Line of Credit, and is only available with an adjustable rate loan.
“Do Some Homes Not Qualify for a Reverse Mortgage?”
Vacation homes, secondary residences, and primary residences that include four or more rental units do not qualify for a Reverse Mortgage. For other refinancing options for these properties, please call us directly (760) 579-9519.
“What if I Owe More than the House is Worth?”
All Reverse Mortgages offered by Bless this Address are non-recourse loans, meaning you, the homeowner, will never owe more than the house is worth. The Federal Housing Administration (FHA) insures all HECM loans; Mortgage Insurance is included in the closing costs. Meanwhile, the Lender’s proprietary loans also guarantee the non-recourse feature. The Homeowner (and your heirs or estate) will never owe more on the home.
“Can My Children Still Inherit the House?”
The estate inherits the home as usual, and as with any outstanding mortgage, there is a lien on title. The lien is whatever proceeds were received from the Reverse Mortgage plus accrued interest. For example, someone takes out a Reverse Mortgage and after 10 years owes $150,000. The homeowner relocates or passes away and the estate sells the house for $350,000. The lender gets $150,000 and the estate inherits $200,000.
Or, if after 10 years your children want to live in the house, they can refinance the $150,000 loan just as they would any other traditional 15- or 30-year mortgage. They will immediately have $200,000 in equity.
Additionally, a Reverse Mortgage is a “non-recourse” loan which means that the homeowner (or their estate) will never owe more than the value of the property. Non-recourse simply means that the borrower (or estate) does not pay any outstanding loan balance to the lender; Instead, the Lender is responsible for any difference between the home’s market price and the total loan amount.
“When does the Loan Come Due?”
The loan is due and payable within 6 months after the last remaining homeowner sells the property, permanently leaves the home, or passes away. HECM loans and some Lender’s loan will grant an additional 6 months when submitted in writing.
“How Much Income Tax do I Pay on the Cash from the Reverse Mortgage?”
The proceeds from a Reverse Mortgage are actually not considered income and therefore are not taxable. Furthermore, the interest on a Reverse Mortgage can be tax deductible at the time of repayment. Consult a tax adviser for more information.
“What is This Going to Cost Me?”
Typically, the out-of-pocket expenses incurred during the application process includes the cost of the third-party counseling ($150-350). Some lenders can pay the appraisal fee and deduct the cost from the borrower’s proceeds. All other closing costs are wrapped into the loan itself so there is nothing else out of pocket for you.
“What’s the Fine Print?”
- A homeowner must be at least age 55 to be eligible for a Reverse Mortgage.
- Not everyone will qualify.
- Property Taxes and Insurance Premiums must be paid on time or the loan will be called due.
- Property must meet and maintain minimum safety standards or the loan will be called due.
“Why Doesn’t Everyone Do This?”
Great question! There are a few reasons. Primarily, the Reverse Mortgage concept is a major paradigm shift from the traditional 30-year mortgage: regular mortgage payments, the occasional refinance when interest rates are low, pay off the mortgage by the time you retire. This traditional forward-mortgage model is unattainable for some homeowners now faced with early retirement or rising costs. Secondly, homeowners are so ingrained to the “monthly mortgage payment” that thinking about their future without one is… mind-blowing. Finally, some homeowners want to leave their house, fully-paid for, to their children. Often, these adult children (with children of their own) would rather know mom and dad don’t have to struggle anymore but can now live happily ever after! If you do need the house fully-paid for your heirs, and need funds now for upgrades, debts, etc. we can still collaborate about how the Reverse Mortgage balance would be paid off.