It might surprise you to learn that reverse mortgages have been available since 1961. The formal name of this program is a Home Equity Conversion Mortgage, or HECM.
Individuals 62 years of age or older can use a reverse mortgage to access the equity in their current home, or even purchase a new home, without having ongoing mortgage payments. Reverse borrowers are required only to maintain the home and pay the taxes, insurance and any homeowners association fees as they come due.
There is no requirement to repay the loan until the borrower no longer occupies the home. Funds can be taken in a combination of ways. Options include a lump sum at closing, a line of credit that can be accessed when needed, or an annuity payment.
One of the most beneficial features of a reverse mortgage is that they are “non-recourse,” meaning that the homeowner does not have to pay back any balance if it is more than the value of the home. HUD insures these loans and makes this feature possible.
I am not aware of any other mortgage-related product available today that can offer this feature.
Reverse mortgages can be a perfect vehicle for seniors to protect themselves against outliving their assets and can allow them to remain in their homes indefinitely.
If you meet the age requirement and are seriously considering a reverse mortgage, meet with a qualified mortgage professional who will explain all the fees and terms in detail so that you can make an informed decision.
Mark Brittman, who has 40 years’ experience in banking, is a reverse mortgage specialist with CoastalStates Bank. mbrittman@coastalstatesbank.com
