What is a Reverse Mortgage? Part I
by Jason Eichmiller
What is a reverse mortgage and how do you know if it’s right for you? There’s so much conflicting information about reverse mortgages. While some is true, the rest is either outdated or just plain false. In this article we’ll focus on what a reverse mortgage REALLY is and dive into a few common misconceptions about this program.
A reverse mortgage is an FHA insured program for folks 62 and older who own and live in their home. It gives seniors the ability to take part of their home’s value out, in tax-free cash, without needing to make monthly payments. This is important because there is no repayment obligation.
A senior person remains on the title (because he or she owns the home), and does not have to pay anything back until he or she decides to sell the home, or both seniors on the title die. It is important to note that property taxes and homeowners insurance must still be paid. If both seniors on the title die, the house will go to their heirs who will be able to either sell the home or refinance to pay the reverse mortgage off.
So, here’s a quick example of how this works. Let’s say Suzy is 68 and has a $300,000 house with a $100,000 mortgage that she pays $700/month on. Suzy can qualify for a reverse mortgage of about 60%, or $180,000. That amount pays off her mortgage, saving Suzy $700/month. Then, if Suzy wants extra cash, she can take that extra $80,000 in a lump sum, split it into monthly income, or leave it in a line of credit with a growth factor (a REALLY NEAT feature of the reverse mortgage). The extra $120,000 stays in Suzy’s house as equity.
Jason Eichmiller is a Reverse Mortgage Expert at Open Mortgage(NMLS # 2975) in Ambler, PA. Over the years Jason has helped over 400 seniors learn about and acquire reverse mortgages. He is an industry tested professional, and is well known for advising attorneys, CPA’s and financial planners on how to use reverse mortgages as a tool to help their clients. For more information, please call Jason at (267) 289 1095, email at jasoneichmiller@openmtg.com or visit www.reversemortgagereality.com. Jason’s NMLS # is 297995
