Going Forward in Reverse

There is a lot of noise these days about reverse mortgages. What I want you to understand is that what you don’t know about the reverse mortgage as a financial planning tool is more important than what you do know!

Here are the most important things to know about reverse mortgages as they relate to your financial planning:

• All of the funds you receive from a reverse mortgage are tax-free
• You can repay the loan at anytime without having to pay a penalty
• You have piece of mind knowing that your heirs have no personal liability for the repayment of the loan
• Relax in the knowledge that you have no monthly payments and do not have to pay anything on the loan until you no longer occupy the home as your primary residence. This part is worth saying again, no monthly payments!
• Reverse mortgage proceeds do not affect Social Security or Medicare Benefits
• You can structure you monthly payments to coincide with the cash flow you receive form other retirement assets, such as a 401K, to maximize your retirement income
• Your credit history is not a factor in underwriting the loan. Neither is your income, employment, assets or current health
• Funds left in the line of credit continue to grow over time at a rate of one-half of a percentage point greater then the loan’s prevailing interest rate. This gives you more access to tax-free cash over the life of the loan
• You will never be forced to leave your home under any circumstances resulting from a reverse mortgage. You can remain in your home for as long as you desire. You are responsible for the payment of Real Estate taxes and Homeowners Insurance premimums
• There are limits on the origination fees and interest rates charged
• When the reverse mortgage must be repaid, you or your heir may either pay the balance due and keep the house or sell the house and keep the proceeds of sale that remain after the reverse mortgage is paid in full
• Reverse mortgage proceeds can be used to address long-term care and aging in place concerns.