Many American seniors are unprepared for retirement. MSN Money sums the situation up this way, “The sad truth is that Americans do almost no thinking about what kind of retirement they want. They mistakenly assume that Social Security is a retirement program, when in fact it is a supplemental retirement program. The three legs of the retirement “stool”; Social Security, a pension, and private savings- have each seen some shrinkage in the past few years”. Unfortunately for seniors who have recently entered into retirement, or for those planning to do so in the near future, there are limited options to gain financial security.
- Borrowers must be aged 62 or older.
- Your home must be your primary residence.
- Sufficient equity- Borrowers must have sufficient equity built up in their home. Your reverse mortgage advisor will help determine if you have enough equity in your home to qualify.
- Pay off your mortgage- Borrowers are required to pay off any existing mortgage balance at closing either with funds from the reverse mortgage loan or from another source.
- Borrowers must complete a counseling session with a HUD-approved reverse mortgage counselor. A reverse mortgage advisor can provide you with a list of authorized counselors. You have the option of meeting with the counselor in person or by phone.
- Your home must meet Federal Housing Administration (FHA) minimum property standards. In some cases, you may be able to use your Reverse Mortgage Loan funds to pay for required repairs.
- Your home must be a single family residence, a 2-4 unit owner occupied home, or an approved condominium or manufactured home.
Borrowers are encouraged to discuss their financial goals with a trusted financial advisor or family members. For more information on reverse mortgage loan requirements, please visit the US Department of Housing and Urban Development’s (HUD) website.
New York State Department of Financial Services says reverse mortgage loans, “can be an attractive option for senior citizens who may find themselves “house rich” but “cash poor.” Home Equity Conversion Mortgages (HECM’s) are “non-recourse” loans which means that if the home is sold to repay the loan, you or your heirs will never owe more than the loan balance or the value of the property, whichever is less; and the lender cannot look to your other assets to meet the outstanding balance on your loan. The home is generally sold to pay off the loan; however, the loan balance can be paid in full if your heirs choose to keep the home.
Reverse mortgage loans can be a very useful financial tool for seniors who are having trouble affording retirement. Whether medical bills, credit card debt or pending home improvements are financially weighing you down, a reverse mortgage loan could be the right option. Many seniors have used a reverse mortgage loan to live a more financially comfortable retirement. If you prefer to stay in your own home during your retirement years, but are unsure if you will be able to afford to do so, and are interested in learning more about reverse mortgage loans, call 866 404.6138.