Your Money

Reverse Mortgages Offer Freedom And Choices

Posted: 11/12/2010

A reverse mortgage can help a person age in place.

(NAPSI) - If youíre like most homeowners, youíve taken care of your house over the years; now, it seems, your house may help take care of you. Itís due to the reverse mortgage, a government-insured home loan program that lets those 62 and older leverage the equity in their house while eliminating monthly mortgage payments.

How It Works

It works like this: A portion of the equity in the home is converted to tax-free cash. The homeowner no longer makes a monthly payment but continues to pay any applicable taxes and insurance. When the home is sold, the proceeds go toward paying off the reverse mortgage and any remaining cash is kept by the former homeowner.

There are some restrictions, such as the youngest homeowner must be 62 years of age and have equity in the house. However, unlike traditional, forward mortgages, credit scores and income requirements are not a factor with reverse mortgages.

ìReverse mortgages are a fantastic option for folks 62 or older with equity in their house, said Jay Farner, CEO of One Reverse Mortgage, a leading national reverse mortgage lender. ìHowever, there are a number of misconceptions that keep some people from seriously considering a reverse mortgage.î

Truth vs. Myth

The largest concern people considering a reverse mortgage have seems to be that the bank or government will own their home. That belief is totally false.

ìI had heard that the government would own my home and I was afraid Iíd have to give out too much personal information, said Ann Medeiros, 63. But I was completely wrong. My home needed a lot of repairs and I was able to make them with the money from my reverse mortgage. Now Iíll be able to continue to live in this home for the rest of my life.

Many Americans are finding that reverse mortgages allow them to supplement retirement accounts that have been dwindling since the economic downturn.

ìWeíve been able to help clients defer taking their Social Security benefits, postpone IRA and 401(k) disbursements, and even had cases where homeowners were days away from losing their house and, through a reverse mortgage, were able to not only keep their home but eliminate a monthly payment and have tax-free cash for future expenses, Farner added.

If you feel like you might benefit from a reverse mortgage, find a reputable lender who will take the time to understand your financial position and goals and give you an honest opinion. Reverse mortgages are just one of many options.

Learn More

Learn more at www.onereversemortgage.com or call (800) 401-8114.