Reverse mortgage rules change


By Alain Valles, CRMP

The Reverse Mortgage rules changed Oct. 2. For the past 25 years, reverse mortgages have allowed hundreds of thousands of homeowners 62 years old or older to convert the equity in their home into tax-free cash. However, the amount you may receive has changed!

Depending on your age, the percentage of your home value that you may borrow has decreased in many situations. To make matters more frustrating, the cost to obtain a reverse has increased.

Now for the good news.

The following incredible benefits will continue to stay in place:

  • No monthly mortgage payments are required (you must continue to pay real estate taxes and insurance)
  • Ability to receive a guaranteed monthly tax-free check
  • Obtain a line of credit that grows for as long as you live in the home
  • Option to close in a trust to protect your home from creditors
  • You don’t personally guarantee the loan
  • Your children will not be responsible for the loan
  • You continue to own your home
  • You don’t give away your home equity to the bank or government
  • You may pay back a portion or all of the reverse mortgage at any time with no prepayment penalty
  • To better protect you, a one-on-one independent reverse mortgage counseling is required
  • Receive tax-free cash to pay off credit cards, complete home improvements, purchase a car, or just a little bit extra cash to enjoy life!

What should you do?

While a reverse mortgage is not for everyone, it is in your best interest to learn the facts and be prepared before the government changes the reverse mortgage program again.

Take the first step

The key is getting the facts. One great resource is to read the only federally approved consumer booklet, “Use Your Home to Stay at Home,” published by the National Council on Aging. Call or email me and I’ll forward a free copy to you and help you determine if a reverse mortgage is right for you.

Alain Valles, CRMP, MBA, CSA 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 [email protected].