A Guide To

Reverse
Mortgages

What is a Reverse Mortgage?

Reverse Mortgage vs. Forward Mortgage:
An Easy Explanation

A forward mortgage is the type of loan most people are familiar with when buying a home. You borrow money to purchase a property, and over time, you pay it back in monthly installments, gradually building equity (ownership) in the home.

A reverse mortgage, on the other hand, works in the opposite way. It’s designed for homeowners aged 62 and older who already have significant equity in their home (or who want to buy a home with a large downpayment).

Instead of making monthly payments to the lender, the lender pays you, allowing you to access your home’s equity as cash. You’re not required to make monthly payments on the loan, but the loan balance grows over time with interest. The loan is typically repaid when you sell the home, move out, or pass away.

Key Difference:

In a forward mortgage,

you build equity by paying down the loan.

In a reverse mortgage,

you spend your equity while staying in your home.

This makes a reverse mortgage a tool for converting your home’s value into funds to support your financial needs in retirement.  For some people this can be just the tool they need to support themselves in retirement.

Unlock Your Home’s Equity – See How a Reverse Mortgage Works!

Understand how reverse mortgages provide financial flexibility and compare forward and reverse mortgages to see which suits you best.

Why Consider a Reverse Mortgage?

A reverse mortgage can provide you with financial flexibility. There are two major objectives that a reverse mortgage can help you achieve:

Staying in your home:

  • Pay off your current mortgage. Freeing you from the obligation to make monthly payments.  No further payments will be required as long as you live in the home.

  • Receive a lump sum of cash.  If you have enough equity in your home, a reverse mortgage can provide you with a large one-time cash payment. And, you’ll never have to make any payments as long as you live in the home.

  • Receive monthly tax-free income. If you have enough equity in your home, a reverse mortgage can provide you with a set amount of monthly checks to supplement your income. These are tax free and you’ll never have to make any payments as long as you live in the home.

Buying a home:

Buy a new home with no mortgage payment. Many seniors may have significant equity in their home, but desire to move to a new home. Perhaps a new home with less maintenance or closer to family.

Rather than using all of their equity for the new home purchase, a Reverse Mortgage allows you to put down, for example 50% of the purchase price on the new home allowing the purchaser to retain additional funds that could be invested.

The buyer will not have any mortgage payments as long as they live in the home.  

At YourWayLoan, we understand that this is a significant decision, and we’re here to guide you every step of the way. Our goal is to ensure you have all the information you need to make the right choice for your unique situation.

Do you need great credit?

Credit scores are not usually a factor in approving you for a Reverse Mortgage.

Do I need a job or income to qualify?

Income is not usually a factor, since there are not any monthly payments due with a Reverse Mortgage.

Does my age matter?

Yes! Age is a big factor. In addition to meeting the minimum age requirements of 62, the older you are, the more you’ll generally be able to borrow.

Unlock Your Home’s Equity for a More Secure Future!

Stay in your current home without monthly mortgage payments or buy a new home while keeping more of your savings.

Staying in Your Home
with a Reverse Mortgage

A reverse mortgage allows you to tap into your home’s equity without needing to sell or make monthly mortgage payments. This can be a lifeline if you wish to remain in your home while enjoying a more comfortable financial situation.

Key Benefits:

  • Stay in the home you love: Access your equity while continuing to live in your home.

  • No monthly mortgage payments: As long as you meet the terms of the loan, you don’t need to worry about monthly payments.

  • Flexible disbursement options: Choose to receive funds as a lump sum, monthly payments, or a line of credit based on your needs.

Ideal For:

  • Retirees with significant equity in their homes.Retirees with significant equity in their homes.

  • Those who need extra income for medical expenses, home improvements, or daily living costs.

Things to Consider:

  • You must maintain your home and keep up with property taxes and homeowner’s insurance.

  • Your home equity decreases over time as the loan balance grows.

  • The amount you can receive in cash depends on your home value, your age and current interest rates.

Access Your Home’s Equity Without Selling or Monthly Payments!

Stay in the home you love, eliminate monthly mortgage payments, and receive funds as a lump sum, monthly income, or a credit line based on your needs.

Purchasing a Home with
a Reverse Mortgage

You can also use a reverse mortgage to purchase a new home. This is a great option if you’re looking to downsize, move closer to family, or find a property that better suits your needs.

How It Works:

  • Combine your reverse mortgage with a down payment: This allows you to buy a home without taking on monthly mortgage payments.

  • Enjoy financial flexibility: Use the proceeds from selling your previous home or other savings for the down payment.

  • Customize your financing: Work with our team to tailor a plan that fits your needs.

Advantages:

  • No monthly mortgage payments on your new home.

  • Buy a home that otherwise may be out of your price range if paying cash.

  • Allows you to move to a property that better suits your lifestyle.

  • Frees up cash flow for other expenses.

  • Frees up cash for other investments.

Important Considerations:

  • You’ll still be responsible for property taxes, insurance, and maintenance.

  • The amount of your reverse mortgage depends on factors like your age, your home’s value, and current interest rates.

Pros and Cons
of Reverse Mortgages

Pros:

  • Provides you with a source of income during retirement.

  • Allows you to payoff your current mortgage and eliminate your mortgage payments.

  • Allows you to stay in your home or purchase a new one without monthly mortgage payments.

  • Flexible disbursement options to meet your financial needs.

Cons:

  • Reduces your home equity over time.

  • Accrued interest increases the loan balance.

  • May impact your eligibility for certain government assistance programs.

Factors That Affect Qualification

To qualify for a reverse mortgage, you must meet specific requirements:

  • Age: You must be at least 62 years old.

  • Home Equity: Sufficient equity in your home is required.

  • Primary Residence: Your home must be your primary residence.

  • Property Type: Eligible properties include single-family homes, FHA-approved condos, and some multi-unit properties.

Is a Reverse Mortgage Right for You?

A reverse mortgage might be a good fit if:

  • You want to stay in your home without monthly payments.

  • You’re looking to purchase a new home better suited to your needs.

  • You have significant equity and want to improve your financial flexibility.

Unlock Your Home’s Equity for a More Secure Future!

Stay in your current home without monthly mortgage payments or buy a new home while keeping more of your savings.

A Thoughtful Decision

At YourWayLoan, we believe that reverse mortgages should never be rushed into. This is a major financial decision that requires careful consideration. We’re here to help you explore your options, understand the benefits and risks, and find a solution that works for you.

Ready to Explore Your Options?

Schedule a no-obligation consultation with one of our experienced professionals. Together, we’ll review your needs and determine if a reverse mortgage is the right choice for you.

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Schedule a no-obligation consultation with one of our experienced professionals. Together, we’ll review your needs and determine if a reverse mortgage is the right choice for you.