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Reverse the Curse – Make Your Equity Work For You!
By Jacqueline McCarthy
Reverse mortgages have become an important financial resource for senior homeowners due to the broad range of needs these unique loans can satisfy, new programs with improved terms, and easier accessibility. Senior homeowners of all income levels are now looking to reverse mortgages for many different reasons. Reverse mortgages are being utilized as a wealth management tool. Simply stated, there are no limits or restrictions on how the money can be used. With 34 million Americans being age 65 and older, reverse mortgages have taken on increased importance and visibility in the past few years, most recently under the name of Federal Government insured Home Equity Conversion Mortgage (HECM). Direct Finance has been actively providing Reverse Mortgages as one program that can greatly help senior citizens improve the quality of their lives while remaining in their homes. Direct Finance has focused resources on this unique loan product with a goal to work with professional advisors to help their senior clients understand and determine if a reverse mortgage is a solution to their needs.
Although reverse mortgages have been part of the financial landscape for decades, many people cling to outdated fears about what a reverse mortgage is and how it works. Many people do not fully understand the reverse mortgage process and may be carrying some old and misguided ideas about what a reverse mortgage is and the process it entails.
A reverse mortgage is essentially just that -- a mortgage in reverse, in which the lender pays you for the value in your home. This financial tool is growing in popularity as the baby boomer's generation reaches the minimum age necessary to qualify for a reverse mortgage -- 62 years of age. A "reverse" mortgage is a loan against your home that you do not have to pay back for as long as you live there. With a reverse mortgage, you can turn the value of your home into cash without having to move or to repay the loan each month. The cash you get from a reverse mortgage can be paid to you in several ways:
• all at once, in a single lump sum of cash;
• a regular monthly cash advance;
• a "creditline" account that lets you decide when and how much of your available cash is paid to you; or
• a combination of these payment methods.
No matter how this loan is paid out to you, you don't have to pay anything back until you die, sell your home, or permanently move out of your home. To be eligible for reverse mortgages, you must reside in your home and be 62 years of age or older.
Reverse mortgages have a different purpose than forward mortgages do. With a forward mortgage, you use your income to repay debt, and this builds up equity in your home. But with a reverse mortgage, you are taking the equity out in cash.
The reverse mortgage industry is undergoing rapid and positive change. The first wave of baby boomers is set to turn 62 in 2008 and with the personal savings rate at an all-time low, additional options to fund retirement plans are an obvious need when Social Security and Medicaid benefits are simply not sufficient.
For many homeowners it is an excellent way to access the equity that has built up in their homes without taking on additional debt or selling their homes. The loans are safe and secure because the federal government, through HUD/FHA, insures them. Additionally homeowners continue to own and maintain full control over their homes. With a reverse mortgage, your home title remains with you.
To discuss if a Reverse Mortgage is right for you or someone you love contact Jacqueline McCarthy at (781) 424-0861 or (508) 746-5626. Visit their website at www.directfinanceplymouth.com .
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