As with many financial products, Reverse Mortgage loans can be complicated. Here are the realities.
You continue to own your home.
You retain the title and ownership of your home during the life of the loan, and you can sell your home at any time. The loan will not become due as long as you continue to meet loan obligations such as living in the home, maintaining the home according to Federal Housing Administration (FHA) requirements, and paying property taxes and homeowners insurance. However, your loan balance will increase as interest and fees are added to the loan balance each month.
You can pay off an existing mortgage with Reverse Mortgage loan proceeds.
Many borrowers use a Reverse Mortgage loan to pay off an existing mortgage and eliminate monthly mortgage payments.
You might not owe taxes on Reverse Mortgage loan proceeds.
Generally, money received is not considered income and may be tax free, although you must continue to pay required property taxes and homeowners insurance. Consult with your tax and/or financial advisor for details. Tri Counties Bank does not offer tax or legal advice.
You are not restricted on how you can use Reverse Mortgage loan proceeds.
The cash proceeds from a Reverse Mortgage loan can be used for any purpose. Many borrowers use it to supplement their retirement income, pay off debt, pay for medical expenses, remodel their home, or help their children.
A Reverse Mortgage could benefit borrowers at all income levels.
Low income seniors can use Reverse Mortgages to enhance their retirement income to meet expenses. Senior borrowers with healthy retirement assets can use Reverse Mortgage loans as part of their financial and estate planning.
Your heirs will still be able to inherit your home.
A Reverse Mortgage does not prevent the home from being passed on to heirs. As with all property inheritance, heirs receive the property, along with the equity or debt attached to it.
There are safeguards to help survivors stay in the house.
Reverse Mortgages have safeguards in place to help the surviving spouse stay in the home as long as they meet loan conditions.
For additional information regarding a Reverse Mortgage, visit https://www.consumerfinance.gov.
Before applying for a Home Equity Conversion Mortgage (HECM), you must meet with a counselor from an independent government-approved housing counseling agency. There may be a fee for this service.
This page was not issued by HUD or FHA and was not approved by the Department or Government Agency.