If you are a senior citizen who is interested in refinancing your home or getting a new mortgage, chances are, you have come across the term reverse mortgage. A reverse mortgage is a loan that is specifically for borrowers that are 62 years or older and can help them receive supplemental income to help with a wide variety of expenses. If you are interested in learning more about how a reverse mortgage works, and if it would be a beneficial option for you, contact Dan Turner with Geneva Financial today. We serve clients in the regions of Hawaii, Illinois, and Ohio, and we can work with you to understand your home financing options.

Understanding a Reverse Mortgage

A reverse mortgage allows Senior Citizens to convert a portion of the equity in their home into a sum of cash, a guaranteed ongoing monthly payment stream (called “TENURE”, or a line of credit while still being able to live in their home and make voluntary monthly mortgage payments. Essentially, in a traditional mortgage you pay a lender monthly mortgage payments, however, in a reverse HECM HELOC mortgage, the lender pays you a cash advance for your home equity, and the cash you receive is typically tax free. You are able to use the money for any good reason you need, whether it is for home maintenance, medical bills, a supplement to your retirement income, etc. A reverse mortgage does not need to be paid back until you sell your home, move out, or pass away. At that point, over a YEAR is provided for the Heirs to cure the loan. During that period? NO PAYMENTS are required (unlike conventional loans that demand monthly ongoing payments at the family’s expense).

One of the great benefits of the reverse mortgage is that it is federally insured, meaning if the housing market declines, you are protected. If the loan ends up exceeding the value of the home when it is eventually sold, this government insurance will cover the difference. It is also important to know that you will remain the owner of your home. People often think that the lender will own your home if you take advantage of a reverse mortgage. As long as you meet the requirements of the loan and continue to pay your property taxes and homeowner’s insurance, you will always remain the owner of the home.

An Adjustable Rate reverse mortgage would always provide an availability to the HELOC. Even if no equity is immediately available (only due to the large sum being financed and no remaining equity) the Adjustable rate allows you to create a HELOC at a later date if you wish, while maximizing the amount of equity you can use in the plan. Remember-the Fixed Rate plans do not offer a HELOC. The adjustable rate plans DO. Avoid the fixed rate plan as it eliminates your ability to manage the loan in future years and may also deprive you of significant equity at the close and in the first 13 months that is provided for you through using the adjustable rate plan.

The FHA HECM HELOC should be the first step taken in Retirement financial planning because “more Time” gives the program time to mature and grow in values. As each program may be customized to meet current and future retirement and aging issues, our goal is to help you understand these types of scenarios and to guide you through the reverse mortgage process so you can make the absolute best decision for your unique situation.

Qualifications For a Reverse Mortgage

When you decide that a reverse mortgage could be a good option for you, there are some qualifications to consider, including:

• You must be 62 years or older
• You must own your home or have a sufficient amount of equity already built up in the home (typically, a 50/50 split of debt to equity works)
• You must live in the home as your primary residence at least 189 days per year
• You must have enough capital to continue to make payments and maintain other housing costs
• You must complete loan counseling in order to prove to uneducated bureaucrats that you (both) fully understand the obligations of the loan

Getting Reverse Mortgage Guidance

When you realize that a reverse mortgage would be a good fit and a great retirement planning tool for you and are located in the areas of Hawaii, Illinois, or Ohio, Dan Turner with Geneva Financial, LLC NMLS# 42056 can give you free mortgage planning advice. Contact us today for your consultation.