Historically, reverse mortgages have not been a popular choice in financial planning circles, but in these changing times, everything adapts, including
Home Equity Conversion Mortgages (HECM – this is the name of
the FHA insured reverse mortgage program). The HECM reverse mortgage is becoming viable and much more attractive to people that are looking to
explore their options for income and retirement.
A reverse mortgage is counter-intuitive to many people, in that it is a loan that is taken out based on the age of the youngest homeowner and the value
of your home. That’s a very unusual financial arrangement, which is why not everyone can get one. So if that’s the case, who can get a reverse
Age & Ownership Matter
A HECM reverse mortgage is specifically designed for people age 62 and above. This is one of the few times in life where it’s better to be older because
the older you are, the more money you can get from a reverse mortgage. You also must own and live in your home as your primary residence and have
some equity in the property. However, with a “HECM for Purchase” program, you can also buy a home using a reverse mortgage, but this is a topic
for another day.
A reverse mortgage is a good fit for people that wish to spend the foreseeable future living in their home. Since a reverse mortgage is still a loan
on the home, you, as the homeowner, remain in title to the home and must continue to pay the property taxes and homeowner’s insurance as well as
maintain the home. Also, as long as one homeowner continues to live in the house as their primary residence, you will never have to make a mortgage
payment on the loan. Please understand that it is not free money. Interest is still charged on the loan, but instead of being paid with monthly
payments, it is added to the balance of the loan and slowly chews up equity in the home. This loan is not intended for someone who wants to leave
a free and clear house to their heirs, but it can dramatically improve your retirement lifestyle.
However, to truly get a good understanding of whether a reverse mortgage is good for your specific financial and retirement needs, it would be best
to discuss it with your financial advisor and Bruce Simmons, the reverse mortgage manager at American Liberty Mortgage, Inc in Denver. Bruce will
always provide comprehensive reverse mortgage information for people interested in gathering accurate information to see if this program is a fit
for their retirement plans.