Reverse mortgages – Get the facts

0
115

By Alain Vallès, CSA, MS, MBA

Managing Director, Helping Hands Community Partners, Inc.

 

Alain Valles

 

As Managing Director of the self-funded nonprofit charitable mortgage company, Helping Hands Community Partners, our mission is to educate people about housing options and, when appropriate, we may arrange reverse mortgages.

 

Get accurate information

The first step regarding “reverse mortgages” is to get accurate information.  Reverse mortgages are a government insured home loan program that allows qualified senior homeowners the ability to access cash whenever needed in the form of lump sum cash, a monthly amount, and/or a line of credit that grows if you need cash in the future.  For thousands of people, this has been an excellent approach to having extra cashflow, paying off an existing mortgage, home repairs, credit cards, medical expenses, or just peace of mind knowing money is available if needed during these stressful times.

 

Key benefits for qualified homeowners

  • No monthly mortgage payments are required. That means you can increase your monthly cash flow by paying off a current mortgage with a reverse mortgage
  • Receive monthly cash for life or a specific time period
  • Unlike a bank home equity line, ability to have a line of credit that grows over time with no monthly interest payments required
  • Option to shield your home from Medicaid recapture with a properly structured irrevocable trust

 

Debunking the top myths

  • You lose title or control of your home. You own your home.  Just like a conventional mortgage, you may sell your home with no prepayment penalty.
  • The government takes your home and you lose your equity. When the home is sold, any remaining equity would go to you or your estate.
  • My family would be responsible if the home is worth less than any remaining mortgage balance. Unlike traditional bank loans, you or your estate is not personally responsible to pay back the loan.  This is called nonrecourse.
  • Reverse mortgages are expensive. Depends is the correct answer.  Based on your current situation, a reverse mortgage may be more expensive than a traditional loan but almost always much less expensive than moving.  Call to get a detailed quote.
  • You must pay the real estate taxes, insurance, and any other property charges such as condo fees. That one is true.  You must meet all loan guidelines.

How do I qualify for a reverse mortgage?

The following are the initial questions that we ask to determine if you qualify:

  • Age (one homeowner must be at least 62 years old)
  • Estimated home value (must be your primary residence)
  • Current mortgage balance, if any (property does not have to be free and clear)
  • Have the real estate taxes and insurance been paid on time for the past two years (if not, you may still qualify)
  • Amount of monthly income
  • We are then able to calculate the amount of money that will be available to you

 

Top uses

The first step is to call or email us.  We’ll review your personal situation, goals, and

  • Increase monthly cash flow
  • Lump sum of cash
  • Pay off a current mortgage or home equity line
  • Payoff credit cards
  • Complete needed home repairs or desired improvements
  • Finalize divorce situations
  • Install a new septic system
  • Purchase a new or used car
  • Estate and financial planning purposes
  • Cash reserves for unforeseen emergency life events
  • Home accessibility improvements
  • The option of receiving a lump sum of cash, a monthly distribution, a line of credit or a combination of the three – all tax free
  • Peace of mind knowing that cash is available if needed

 

The key point is a reverse mortgage is a very flexible financial tool that can achieve varied goals.  The first step is to obtain accurate information.

 

What is the first step in the process?

 

The first step is to call or email us. We’ll review your personal situation, goals, and discuss if you qualify. If you’re interested in more information, we will review, the cost, benefits, guidelines, forms, counseling requirements, and different options to receiving the cash.  Our goal is to share information with you so that you may make a fully educated decision if a reverse mortgage is right for you.

 

Is there anything you can mail me?

 

Yes.  A great place to get information is the free “How to Use Your Home to Stay at Home” 36-page book. This is the official reverse mortgage consumer booklet approved by the U.S. Department of Housing & Urban Development and published by the National Council on Aging.

Please give me a call 781-724-6221 or email reversemortgageinfo@hhcp.org with your questions and to receive your free copy of “Use Your Home to Stay at Home.”  We’re here to help.

 

Alain Valles is Managing Director of Helping Hands Community Partners, Inc. and was the first designated Certified Reverse Mortgage Professional in New England.  He obtained a Master of Science from the M.I.T. Center for Real Estate, an MBA from the Wharton School, and graduated summa cum laude from UMass Amherst.  Alain can be reached directly at 781-724-6221 or by email at reversemortgageinfo@hhcp.org