Homeowner’s Corner: A new version of reverse mortgages is available

You worked hard for your home, now you can let your home work hard for you. If you hate monthly payments but would like to buy a home for your offspring, a boat or a vacation home, you don’t have to have payments or cash. You can use your home equity to make a large purchase or pay down your installment or credit cards debts using a fixed-rate reverse mortgage on your primary home.
The qualifying age for this type of reverse mortgage is for homeowner’s age 55 and over.
The homes that qualify for this type of mortgage are home values that exceed the FHA loan limit of $822,375 or homes that don’t qualify for FHA such as condominiums and some Planned Unit Communities.
You can never owe more than the home is worth because this is the a non-recourse loan, which means that the lender can only recoup funds from the value of the property. Your heirs cannot be held responsible if the loan exceeds the value of the home.
Ownership of the home is still retained by the individual(s) on the title just like a traditional mortgage.
The way that this loan differs is that you borrow against the equity in your home and receive a lump sum of ash at closing and/or a line of credit. There are no monthly mortgage payments required as long as you live in and maintain the home and continue to pay property taxes and homeowners insurance.
It’s your money – you can use it any way you wish. Give your kids/grandchildren an early inheritance with a gift of a downpayment on their home.
It’s income tax-free and typically does not affect Social Security payments. The loan comes due when you 1) sell the property; or 2) no longer live in the home as your primary residence; or 3) if you fail to meet your loan obligations such as paying property taxes, homeowners insurance, and for home maintenance.
When the balance of the loan is paid off, any remaining equity will go to your heirs. If the home has appreciated their inheritance could have increased significantly. They have an option to sell the home and reap the increase in value.