The new reverse mortgage: A wise decision


By Alain Valles

You’ve worked hard, sacrificed for the kids, tried to save for retirement and chipped away at your mortgage. But now you need additional cash for the next chapter of your life. The new reverse mortgage may be your best option for converting your home equity into cash so you can afford the lifestyle you desire.

What is a reverse mortgage?

Reverse mortgages are a government insured loan program that allows homeowners age 62 and older to gain access to the equity in their home in the form of cash, a monthly check, line of credit or any combination of the three.

A_VALLESCurrently there are no income, asset or credit requirements. It’s based simply on your age, house value and the amount of your current mortgage, if any. The biggest advantage a reverse mortgage is that you are not required to make any monthly mortgage payments — ever. If you pay your property taxes, homeowners insurance and maintain the property, the loan balance is not due until the last remaining homeowner no longer uses the home or the property is sold.

What’s “new” about the new reverse mortgage?

There have been several significant changes to the reverse mortgage program that should prompt you to take a look to see if a reverse mortgage is right for you.

Spouses under the age of 62 are now protected. Before this rule change, a younger spouse was at risk of being forced to sell the home if the older spouse died. Now younger spouses may live in the home for the rest of their lives without ever being required to make a monthly mortgage payment.

Maximum loan limits have been adjusted to help maintain home equity and increase the possibility of a greater inheritance. In addition, required mortgage insurance makes the program safer.

The cost of obtaining a reverse mortgage has substantially decreased for borrowers with lower current mortgages. This makes a reverse mortgage very competitive with traditional home equity lines.

How can I use the proceeds?

Seniors and their trusted advisors now view reverse mortgages as an integral component of retirement planning and are taking advantage of the flexible options. Below are common examples of how a reverse mortgage may be used:

•Be able to afford to stay in your home;

•Increase monthly cash flow by paying off an existing mortgage and debts;

•Receive monthly funds for life;

•Reduce pressure on your retirement funds during a down market;

•Utilize a reverse mortgage line of credit for unforeseen expenses such as healthcare events or children needing money;

•Have funds available for home improvement and possible home care needs;

•Increase the potential of maximizing Social Security benefits; and

•Enjoy having a few extra dollars each month.

A reverse mortgage is not for everyone. But for qualified homeowners it is an excellent way to get extra cash, without the burden of monthly mortgage payments.

Alain Valles, CRMP and president of Direct Finance Corp., was the first designated Certified Reverse Mortgage Professional in New England. He can be reached at 781-724-6221 or by email at or visit Read additional articles on