Enjoy the sunset from your new beach home!
I joke sometimes and say the only thing that stays the same is in real estate is change. In today’s real estate market there is always something new to learn and the rules that applied for loans, closing, appraisals, etc. continue to the change. I try to learn something new and recently Reverse Mortgages became the topic of instruction.
This week I learned more about the current FHA Insured Home Equity Conversion Mortgages (HECM) better or by their more familiar name: REVERSE MORTGAGES. I’m not going to try to share everything I learned (you’ll need to see a pro on Reverse Mortgages like Walt Simpson of New American Mortgage 434.249.1998), since I’m still learning! I do know that the Reverse Mortgage can be a great tool for purchasing a property, paying off an existing home mortgage or debt, as well as getting cash out of an existing property (what the owner does with the cash is up to them!).
Without going to deep, please remember as of today the youngest borrower needs to be 62 or older; the home must be the borrower’s primary residence; you’ve got to have significant equity in the home but can have a mortgage w/ some debt; and there are no income, health or credit requirements. I also learned the proceeds of the Reverse Mortgage are not taxable (check with your accountant!). You cannot participate in a FHA Insured HECM until you have completed third party MANDATORY Housing and Urban Development (HUD) counseling. The person receiving the funds form a Reverse Mortgage goes into the process with their eyes wide open to make an informed decision.
OK, so how can you use the funds from a reverse mortgage:
1. Pay off existing mortgages, debts, bills, etc.
2. Saving a home from foreclosure (pretty cool!).
3. Contribute to children or grandchildren’s current education or help them with down payment funds for their home.
4. Purchase a second home at the beach, ski lodge, or anywhere else you want a second home! What a great way to spend the summers at the beach with your grandchildren while keeping your existing home to use the rest of the year.
5. Give cash to family members, friends and/or charity now.
6. There are many other needs/desires that an FHA Insured HECM (Reverse Mortgage) can help with. If you have a need or desire, let’s talk and see if a Reverse Mortgage will help meet the need or fulfil the desire!
Overall, I learned that Reverse Mortgages can be a great tool for home owners 62 and older to reach their financial goals and needs without tapping into investments, current income or savings! Pretty neat!!!
Purchase a vacation home or help children &/or grandchildren with their housing needs.