Once you know about the reverse mortgage loan programs, you will be quite impressed. Right now you don't realize how much you don't know! First we have to make certain that you qualify. As long as you are 62 years old (and older) and have at least 50% equity in your home--that is a good start. If your home is totally paid for, you will be absolutely AMAZED at the growth in your line of credit that you can generate tax free. But let's back up just a little. In addition to age and equity, you must also be "credit worthy." Maybe you don't have great credit; sometimes an explanation is needed. You must prove that you can afford to remain in your home (pay your property taxes and insurance) as well as maintain your property.
Now if you are still with me and see that you DO qualify, let's move forward. Let's answer the WHY in this question! A reverse mortgage loan benefits many seniors. Like I said, most seniors just don't know enough about it. Like in a line of credit, you have access to your money at all times. If you do not use your line of credit, it keeps on growing tax free.
And here is the best part of it all--no more mortgage payments, assuming this is your primary residence. You can live in Florida during the winter, but your primary residence is the home with the reverse mortgage loan in place.
However, what if you still owe on your home? You simply want to get rid of your mortgage payments. You definitely plan to remain in your home for as long as you can. How can YOU benefit by having a reverse mortgage loan? Let's assume you owe $100,000 and the value of your home is a little more than $200,000. You can get a reverse mortgage loan just to eliminate future payments--if that is your goal.
I have a friend who has a home valued at more than $625,500. Since these are FHA insured loans, and FHA limits are $625,500--I showed her what she can earn by getting a reverse mortgage loan and allowing the line of credit that she can access ($321,000) grow. Her FHA insurance, closing costs, origination fees, etc. came out to be about $10,000. Her financial planner said "NO WAY. It costs too much." But then my friend showed him how much her line of credit grows the very first year (over $20,000). Since my friend is only 63 years old, if she is able to let that line of credit continue to grow (without removing any of the money), in just 15 years (she will be 78) it will grow to $497,000+ tax free. Her financial planner wanted a second look!
Another client has a Chapter 13 Bankruptcy. In August, he made his 13th payment to the Trustees and became eligible for a reverse mortgage loan. He is only 62 and plans to pull money out of his line of credit to modify his home so that his wife (she has had 3 strokes and is in a wheel chair) can get around the home more easily. His wife is 58 years old. She will be a "non-borrowing spouse" because she is too young to be on a reverse mortgage loan. If her husband dies first, she can remain in the home but cannot access any money from the line of credit. If she wants to remain in the home and access the line of credit, she would need to put another reverse mortgage loan on the home.
These are AWESOME LOANS. Learn all about them!
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