Reverse Mortgages

Helping Seniors Enjoy Retirement

A reverse mortgage is a tool available for seniors to use equity in their home (that they may have built up over a long time) to pay for their mortgage, rather than having to make payments themselves every month.  Some seniors will use a reverse (also known as a “Home Equity Conversion Mortgage”, or “HECM”) to stay in their current home.  If there is an existing mortgage in place, it can pay that off, and then the remaining equity in the home is what’s used to make future payments.  Instead of the owner making monthly payments to the bank.

Seniors can also use a HECM to purchase a new home.  Let’s say they sell their home and have $300k in proceeds.  They can buy a new home for $300k and pay cash for it.  Or, certain scenarios would allow them to only pay $150k up front, and the remaining $150k is covered by the reverse mortgage.  Now, they keep $150k in the bank to do with what they want, and still do not have to make monthly mortgage payments.  They could get a more expensive house that better fits their needs or preferences.  On a $600k home, that senior may be eligible to only have to pay the $300k at closing, and the remaining amount is covered with the HECM.

A HECM stays in place until the last borrower/owner moves out, goes to assisted living, or passes away.  When one of those events occurs, there are options in place to allow the owner or the heirs to pay off the balance of the HECM and retain the property.