Reverse Mortgages: Utilizing Home Equity in Retirement

Reverse Mortgages: Utilizing Home Equity in Retirement

More senior homeowners than ever before are using reverse mortgages as a way to turn home equity into cash, while remaining in their homes for as long as they choose. According to The U. S. Department of Housing and Urban Development (HUD), there has been a 77 percent increase in the number of senior homeowners who've obtained the federally insured Home Equity Conversion Mortgage (HECM) in the last year alone.
So how do they work? A reverse mortgage enables senior homeowners, ages 62 and older, to convert some of their home equity into cash without selling their home and without having to make any monthly payments. The loan is not repaid until the last remaining borrower has sold the home, permanently moved, or died. . Funds may be used to pay off debt, make home improvements, buy a car, pay for medical expenses, take a vacation, or practically anything else. Reverse mortgages can also be useful financial tools to help seniors plan for their future health care needs.
Regardless of the plan, homeowners (or their heirs) can never end up owing more than the home's value, no matter how long the owners continue to live in the home or what happens to its future value. This non-recourse protection is a critical consumer safeguard. Here are a few more important facts about reverse mortgages:
* Reverse mortgage money is not considered taxable income
* Reverse mortgage money does not affect Social Security or Medicare benefits
* Reverse mortgage money does not affect the homeowner's enhanced STAR benefit or other property tax reductions
* The fees and costs associated with closing and servicing the loan can be financed, resulting in no "out of pocket" costs to homeowners
* The home must be the borrower's primary residence
* Homeowners must keep school/property taxes current, homeowners' insurance paid up-to-date and keep the property in reasonable condition
There is a wealth of resource material at consumers' fingertips to learn the facts. The following websites are particularly good places to start: www.reversemortgage.org (National Reverse Mortgage Lenders Association), www.aarp.org (AARP), www.hud.gov (U.S. Department of HUD).
Contact: David W. Wilson, CLTC, Reverse Mortgage Specialist, M&T Bank, 14 W. Potomac St., Williamsport, Md. 21795, 301-223-6168 (office), 301-639-0442 (cell), dwilson@mandtbank.com.