Cliff Auerswald explains reverse mortgages for seniors 62 and older, covering how they work, borrower protections, and payment options. Proceeds are tax-free and don't affect Social Security or Medicare. The loan is repaid from home sale proceeds, with any remaining value going to heirs.
Well, hello there, and thank you for joining us today in our web presentation brought to you by ARMc, All Reverse Mortgage Company. We do hope by the end of today's web presentation that you have a better understanding of the many consumer safeguards and benefits a reverse mortgage has in store for you. What is a reverse mortgage? A reverse mortgage allows a borrower who is of age 62 or older to convert dormant equity into spendable tax-free cash without ever making a mortgage payment. Reverse mortgages were started by the FHA, that's the Federal Housing Administration, and signed by Ronald Reagan in 1988. With the baby boomers approaching retirement, the reverse mortgage has gained widespread acceptance as a safe and viable retirement tool to many. How are reverse mortgages different today? Prior to the FHA, some banks wrote reverse mortgages that could take title from the owner, and this is where the most common misconception lies, that when you pass away, the bank will take your home. This could not be further from the truth. Today's reverse mortgages are gaining this widespread acceptance as a safe and viable retirement tool with many built-in consumer safeguards. Reverse mortgage compare to a conventional mortgage. Well, in a conventional, or forward mortgage as they say, you make monthly payments to the bank and over time paying off your loan. On the reverse mortgage, the reverse part of it allows you to take back that equity that you have earned over time to supplement your retirement in either monthly payments for life, a credit line for peace of mind, or even a combination of both. Key features and safeguards built into today's reverse mortgages include government-insured programs allowing for you to retain title through the life of the loan, and then when you no longer occupy you may transfer the title to your heirs. The money that you receive from a reverse mortgage is considered to be tax-free because, remember, this is not income that you're earning, but rather equity that you are taking back. There will be no effect on your public benefits such as Social Security or even your Medicare. There will be no prepayment penalty. And last but certainly not least, the feature of non-recourse allowing you to never owe more than the value of your property, or your heirs for that matter. You receive the funds from your reverse mortgage in several ways: 1. A line of credit that will grow with your age. 2. Cash lump sum that you may advance at closing. 3. Payments over a period of time. Or 4) monthly payments to you for life. You may even choose a combination of all. So those who take a reverse mortgage must be house rich and cash poor. Well, again, could not be further from the truth. Today's reverse mortgages are used for all walks of life. We have seen people use their money from paying off existing mortgages existing credit card debt to taking home improvement money or just traveling. Whether you utilize a reverse mortgage in a $300,000 home or a $3 million home, a reverse mortgage has become a popular investment and retirement tool to many seniors today. Qualifications are quite simple. You must be of minimum age 62 or older and have excellent home equity. Unlike traditional mortgages, there will be no income or employment verifications. To keep your reverse in good standing, you must occupy the property as your primary residence and pay your property taxes. Remember, it is your home. You must maintain your home in a reasonably good condition. There are several property types that are eligible for reverse financing, including single-family residences, condominiums or planned unit developments, multi-unit properties, as well as modular and manufactured homes. Another safeguard built into the reverse comes with third-party counseling. Counseling is a service provided by a HUD-approved counseling agency and usually takes anywhere from 45 minutes to an hour upon completion. Once you receive your counseling certification, you may proceed to application. A family trust, power of attorney, or even a conservatorship are all acceptable methods of closing under your reverse mortgage. The costs associated with a reverse mortgage are never out-of-pocket expenses. These costs are typical to any conventional mortgage, which will include an origination, a title, appraisal, and so forth. If the government-insured HECM is best for you, an additional 2% mortgage insurance will be applied to your reverse mortgage. At All Reverse Mortgage, we are committed to your needs. We ask that you put your trust in the hands that know reverse lending best. All Reverse Mortgage Company. Thank you for joining today's web presentation brought to you by All Reverse Mortgage Company. If you have further questions about your reverse mortgage benefits, please call today and speak with one of our knowledgeable senior specialists.
