Local Lenders and Banks: Some lenders offer Home Equity Conversion Mortgages (HECM's) www.reverse.org that allow homeowners to turn the value of their home into cash, without having to move or make regular loan payments.
Reverse Mortgage
Things to know about reverse mortgage:
Since your home is probably your largest single investment, it's smart to know more about reverse mortgages, and decide if one is right for you!
What is a reverse mortgage?
A reverse mortgage is a special type of home loan that lets a homeowner convert the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to the homeowner: in a lump sum, in a stream of payments, or as a supplement to Social Security or other retirement funds. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrowers no longer use the home as their principal residence.
What's the difference between a reverse mortgage and a bank home equity loan?
With a traditional second mortgage, or a home equity line of credit, you must have sufficient income to qualify for the loan, and you are required to make monthly mortgage payments. A reverse mortgage works very differently. The reverse mortgage pays you, and it is available regardless of your current income. You don't make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes and other conventional payments like utilities.
Can the lender take my home away if I outlive the loan?
No! You cannot outlive the loan agreement, and no debt from a Reverse Mortgage will be passed along to the estate or heirs. You cannot be forced to sell your home to pay off the mortgage loan even if the loan balance grows to exceed the value of the property.
Will I still have an estate that I can leave to my heirs?
When you sell your home or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other finance charges, to the lender. All proceeds beyond what you owe belong to you or your estate. This means the remaining equity in your home can be passed on to your heirs. No debt will ever be passed along to the estate or heirs. You retain ownership of your home, and may sell or move at any time.
How much money can I get from my home?
A borrower will receive a reverse mortgage amount based on a formula which includes a Maximum Claim Amount. In general, this means the maximum amount you can receive will be determined by factors including the age of the borrower(s), and the appraised value of the property. For example, based on a loan at recent interest rates, a 65-year-old could borrow up to 26 percent of the home's value, a 75-year-old could borrow up to 39 percent, and an 85- year-old could borrow up to 56 percent. You should discuss the formula with your lender and your financial housing counselor.
Should I use an estate planning service to find a reverse mortgage?
I've been contacted by a firm that will give me the name of a lender for a
"small percentage" of the loan. It is NOT recommend to use an estate planning service, or any service that charges a fee just for referring a borrower to a lender! There are some services, such as HUD (www.hud.gov) which provide this information without cost, and
HUD-approved housing-counseling agencies are available for free, or at minimal cost, to provide counseling and free referral to a list of HUD-approved lenders. Before you agree to pay a fee for a simple referral, you might consider calling 1-888-466-3487, toll-free, for the name and location of a HUD-approved housing counseling agency near you.
Medicare and Medicaid
Consider Medicare payments for limited "durable" medical equipment with a doctor's prescription; i.e., wheelchairs, walkers, canes and hospital beds.
The Triad Project
Check with the regional assistive technology center in your state to help identify programs and resources in local communities for home modification and technology ideas. Grant funding provided by the National Institute on Disability and Rehabilitation Research.
