With a Reverse Mortgage, Your Home Can Pay You to Live in it

Real Estate, Closings, Title, and Estate Planning in Coral Gables, Miami-Dade County, and Broward County

By Joe Pujol

Nov 25

What is a reverse mortgage?

A reverse mortgage, more properly a Home Equity Conversion Mortgage (HECM), is a Federal Housing Authority (FHA) mortgage that's designed to help senior citizens age with dignity by remaining in their homes.

With a reverse mortgage, seniors 62 and older are eligible to withdraw up to 50% of the appraised value of their homes.

Unlike other loans, recipients don't need to make monthly payments. No payment will be due until the home is sold, though seniors can make payments to reduce the outstanding loan if they choose to do so. You still own your home and can never be forced to leave as long as you meet the loan requirements listed below.

Interest will be added to the loan for each month that goes by without a payment, but the total amount of money that's owed on the loan can never exceed the appraised value of the home at the time the mortgage was made, no matter how many years you remain in the property.

Why should I get a reverse mortgage?

A reverse mortgage benefits seniors by converting their home equity into cash that they can use to improve their lifestyle and reduce the stress that can come with the added expenses associated with aging.

Further, the money you'll receive from a reverse mortgage is not subject to income taxes. Since it's not earned income, it's already your money. It's just the same as if you were withdrawing from your savings account.

If you're a senior citizen, you've likely been paying to live in your home for years. A reverse mortgage gives you the opportunity for your home to pay you to live in it, freeing you from monthly mortgage payments and allowing you to improve the quality of your life by redirecting those funds for you to use as you wish.

What are the requirements of a reverse mortgage?

To qualify for a reverse mortgage, the FHA requires that...

Applicants are 62 or olderThe applicant must own the homeThe home is the applicant's primary residenceThe home must be kept in good repairThe applicant must have enough income to pay property taxes and home insurance (which is usually covered by social security and/or pension income)

A reverse mortgage can be an economic lifesaver. The FHA is very diligent in making sure seniors have the proper information and instructions before starting the process. However, it's very important that you utilize the services of experienced attorneys to ensure that all your rights and your heirs' rights are protected. To discuss the details and find out the facts, contact us.