Retirement News with Professor Craig

Retirement News with Professor Craig

The Retirement News blog is dedicated to the financial and physical health and well-being of older Americans. 
Whether you're already in or nearing retirement, you will find important, topical information in the blog to help you make informed decisions on your road to retiring more freely.
As a 25-year veteran in the financial services industry and a certified trainer and teacher, Professor Craig's #1 goal is to help you thrive in retirement with financial peace of mind. 

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Truth Be Told: Get the Facts About the Reverse Mortgage Loan
Retirement News, Financing Retirement, Reverse Mortgage Facts

Truth Be Told: Get the Facts About the Reverse Mortgage Loan

Truthfulness is the foundation of living with integrity. That’s why on July 7th, we observe Tell the Truth Day — a day is set aside to encourage people to tell the truth, even if it’s challenging or uncomfortable.

So at Reverse Mortgage Funding (RMF), we’re setting the record straight on the reverse mortgage loan — and why it may or may not be the smartest financial tool for your retirement.

Learn how the reverse mortgage loan has evolved over the years

If you’re concerned about having the funds to sustain a comfortable retirement, a reverse mortgage can provide an additional income source for financial peace of mind. This type of loan works by allowing eligible older homeowners to leverage their home equity rather than spending down investible assets that could be earning interest.

Overall, a reverse mortgage (also referred to as a Home Equity Conversion Mortgage, or HECM) can be a smart means to supplement retirement income, as long as you have the facts.

  1. The bank doesn’t own your home. When you take out a reverse mortgage, the bank has a lien on your home just as it would with a traditional mortgage. That means it has first claim on the proceeds from a sale. As the borrower, you still own the home.
  2. The home must remain your principal residence. Moving out of the home (as your primary residence) can trigger a reverse mortgage loan to become due. So if you plan to relocate to live with family or move to a long-term care facility, this type of loan may not be right for you.
  3. You have more control over your money, compared to traditional mortgage products. A HECM line of credit offers benefits of a traditional Home Equity Line of Credit (HELOC) but gives you more flexibility in how you receive those funds. Plus, the unused portion of a HECM line of credit grows over time* — independent of home value. And as long as you continue to meet your loan obligations, the lender cannot reduce or cancel your line of credit.
  4. There are obligations that must be met to keep your loan in good standing. Homeowners are responsible for basic upkeep and repairs, and paying homeowners insurance, taxes, and other costs of homeownership. Failing to handle these expenses can result in immediate obligation to repay the reverse mortgage or risk foreclosure.
  5. You may make monthly payments — or not. There are no monthly principal and interest payments for reverse mortgages — as long as you meet the obligations of the loan. You can pay back as much or as little as you’d like each month, or nothing at all.
  6. Just like any other mortgage product, there are fees. In addition to an origination fee and closing costs, there’s also an upfront Mortgage Insurance Premium (MIP). These upfront costs can be financed by the loan to minimize the out-of-pocket expense. There’s also a fee for reverse mortgage counseling by an independent, third-party counselor, to make sure you understand all aspects of the loan. During the life of the loan, interest and the annual MIP accrue on the outstanding loan balance, which is due when the loan is repaid.
  7. If you move, pass away or sell the home, principal and interest payments are required.  When certain life events deem the loan due and payable, you are responsible to make principal and interest payments.
  8. There are strong protections in place for borrowers. As mentioned above, each potential borrower must meet with an independent, FHA-approved counselor to objectively ensure that they understand the reverse mortgage process and the individual terms of their loan. When your property is sold — if the sale of the home doesn’t cover the balance of the loan — the borrower or heirs are not responsible for the difference of the loan. A reverse mortgage is a non-recourse loan, so you won’t  owe more than the home is worth when the loan is repaid.
  9. You can still leave your home to your family. Your heirs will still inherit your home, but they will have to pay back the loan balance if they want to keep it; this includes the amount of funds you used plus accrued interest and fees. They can also sell the home to repay the loan. Once it’s repaid, they retain any remaining equity.
  10. Eligible Spouses aren’t kicked to the curb. Your co-borrowing spouse may remain in the home as their primary residence, and access reverse mortgage funds, as long as they continue to meet the loan obligations. On a HECM, a qualified non-borrowing spouse who meets certain conditions can continue living in the home; however, they will not have access to any additional reverse mortgage funds since they are not a borrower.

Knowledge is power

Reach out to the loan specialists at RMF to learn more during an in-person consultation. We look forward to sharing more reverse mortgage truths! Call us today at (888) 277-1567 to schedule a free, local appointment.  

This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans retire more freely, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 4.5-star / Excellent score on Trustpilot; 4.8 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call 888-277-1567 to speak with a licensed reverse mortgage specialist to learn about our retirement financing products and solutions.

*If part of your loan is held in a line of credit upon which you may draw, then the unused portion of the line of credit will grow in size each month. The growth rate is equal to the sum of the interest rate plus the annual mortgage insurance premium rate being charged on your loan.


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A More Flexible Home Equity Loan

If you’re 62 or older, there is a home equity line of credit option that offers greater financial flexibility than a traditional Home Equity Line of Credit (HELOC). It’s called a Home Equity Conversion Mortgage (HECM) line of credit. 
If you have an existing mortgage or home equity loan you could refinance them with a HECM line of credit and get enhanced benefits, including a flexible payment feature and a line of credit that GROWS when left untouched.
As with any mortgage, you must meet your loan obligations, keeping current with property taxes, insurance, and keeping your home in good condition.

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By clicking "CALCULATE", you are providing your signature and express "written" consent to be contacted by or behalf of Reverse Mortgage Funding LLC, its affiliates and/or its agents (collectively Company) at the telephone, email or mailing address that you have provided for purposes of fulfilling this inquiry about reverse mortgages and/or the Company's products or services, even if you have previously registered on a "do not call" government registry or requested Company to not send marketing information to you by email and/or direct mail. You agree that the Company may use automatic telephone dialing systems and prerecorded voice messaging in connection with calls or texts made to the telephone number you provide even if the telephone number is assigned to a cellular or mobile telephone service or other service for which the called party is charged and are representing that you are the regular user of provided number. You understand that you are not required to consent to receiving autodialed calls or texts as a condition of any reverse mortgage and/or purchasing any Company products or services. If you do not wish to authorize Company to contact you in this manner, you can call 888-277-1567 to complete your request. You understand that you can revoke this consent at any time.

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