The majority of people get a reverse mortgage when they find themselves in a situation where they need extra income and have limited options. The reverse mortgage is a safe and effective tool that turns your equity into an income source. This can act as a lifeline to help you through tough times. Often people decide against a reverse mortgage due to a fear of leaving nothing for their children.  With this in mind Monolith Mortgage Group partnered with Universal Wealth to provide advice and options that could help avoid eating up your estate with a reverse mortgage and provide the ability to grow your estate through effective wealth-building strategies. Please reach out to learn more. 

A reverse mortgage is a loan that allows homeowners aged 62 and over to borrow against the equity in their homes.  

In a reverse mortgage, you give up equity in your home in exchange for receiving a lump sum or regular payments, usually used to supplement retirement income.

Home equity is the value of your interest in your home as a homeowner.  Home equity is determined by the current market value after any liens on the property are subtracted.

Our HECM reverse mortgage loans offer multiple payout options.

       The choices are as follows:

1. Lump Sum/LOC – This payout option offers a lump sum payout at closing and a line of credit later.
2. LOC Only – Line of credit only.
3. Lifetime income – Also known as a tenure income plan. This plan offers a monthly paycheck with a lifetime guarantee.
4. 20-Year Income – Term plan with guaranteed income for 20 years.
5. 15-Year Income – Term plan with guaranteed income for 15 years.
6. 10-Year Income – Term plan with guaranteed income for 10 years

Not many people know that you can buy a house with a reverse mortgage. You bring in your down payment, the bank finances the rest with no monthly mortgage payment. All you have to do is live in the home and pay the required property charges. If you’d like to calculate a possible down payment, contact us today.

A HECM for Purchase Loan, also known as a Reverse for Purchase, is a government-insured loan that gives homeowners 62 and older the convenience and flexibility to purchase a new home while eliminating mortgage payments. You make a down payment and let your HECM for Purchase loan from AAG cover the rest. And yes, you read that correctly, no mortgage payments as long as you continue to pay for property taxes, and homeowner’s insurance and keep the home maintained.

How a HECM for Purchase Loan Works

A HECM for Purchase loan combines a reverse mortgage with the equity from the sale of your previous home – or from other savings and assets – to buy your next primary home in a single transaction. Regardless of how long you live in the home or what happens to your home’s value, you only make one initial payment toward the purchase, provided that you pay property taxes, insurance, and maintain the property.

Who Qualifies for a HECM for Purchase Loan?

• You must be age 62 or older (a non-borrowing spouse may be under age      62).
• Your new home must be your primary residence (borrowers must occupy      the property within 60 days of closing).
• You must have a sufficient down payment to purchase your new home      and meet the financial requirements of the HECM program.

Features and Safeguards

The HECM reverse mortgage product has been improved over the years so that it can better meet the needs of older Americans. Today, there are important safeguards in place to ensure that it can continue to help consumers like you for years to come.

• You must complete reverse mortgage counseling with an independent      counseling agency.
• You must undergo a financial assessment to ensure you can meet the      financial obligations of the loan, which includes the ability to pay your      property taxes and homeowners insurance.
• If your spouse is younger than 62, they can qualify as an eligible      non-borrowing spouse and remain in the home even if you leave or pass      away, so long as they continue to meet all loan obligations. (Borrower      must continue to pay for property taxes, and homeowner’s insurance and      maintain the home.)

Learn

Resources and strategies for a better retirement

*Unlike a forward mortgage, the balance of the loan grows over time as interest and mortgage insurance premiums are added to the loan balance monthly.
 

**The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

 What is the 60% rule for reverse mortgage? 

In the first year of a reverse mortgage loan, you may only access 60% of your approved loan amount (or the amount required to pay off your current mortgage plus 10%, whichever is greater). After the first year, you may access the remaining amount. This is to encourage you to not pull from your equity too quickly. 

 Can you get mortgage life insurance on a reverse mortgage?

If you have a large amount of equity in your home, it might be a good choice to use a reverse mortgage to fund your life insurance policy. This would give you control over - and help retain the value of - your estate for the benefit of your heirs. 

Life insurance is an essential part of the financial plan of every individual. And it is particularly important if you have others depending on you, such as your spouse and children. For example, if you are the primary breadwinner in your house, you should have enough insurance to (at the very least) replace your income until your youngest child turns 18.

These days, life insurance is being used in countless ways to not only insure against a worst case scenario, but also for tax planning, estate planning, and even for retirement. One very creative strategy is to combine a life insurance policy with a reverse mortgage; thus allowing the policyholder all the benefits of cashing out the equity in their home, while at the same time ensuring that the mortgage can be satisfied when they die.

What is a Reverse Mortgage: Reverse mortgages are financial vehicles available only to individuals 62 years of age and older that allow homeowners to convert a portion of the equity in their home into cash. To qualify, borrowers must have their homes paid off, or have a remaining balance low enough to be satisfied with the proceeds from the closing of the reverse mortgage. Individuals receive a lump sum or fixed monthly payments, depending on the terms of the loan, and unlike a home equity line of credit, the loan does not need to be repaid as long as at least one borrower is alive and the home is being used as a primary residence.

Which Type of Life Insurance works Best with a Reverse Mortgage: There are two general forms of life insurance, term and permanent life. While term life insurance has significantly lower rates and works very well for individuals who need lots of insurance during their working years, it is generally not the best option to combine with a reverse mortgage. To ensure coverage will remain in effect for the life of the individual policyholder, it is best to have permanent life insurance.

Here is an example of a scenario wherein this strategy might work. A retired couple in their early 70s and in good health wants to tap into some extra money to help supplement their Social Security and pension during retirement. They own a house free and clear with a value of $600,000, and they qualify for a lump sum reverse mortgage on the property of $350,000, or ongoing monthly payments of $2100. To help cover the balance of the loan, they could take out a $350,000 guaranteed joint survivor universal life policy that would remain in effect as long as the premiums are paid (usually until age 121).

For such a policy, monthly premiums could vary widely depending on the health of those insured. In general, however, a healthy couple could expect to pay somewhere between $600 and $1000 a month for $350,000 in coverage. In this scenario, if the couple opted to receive monthly payments, worst case scenario, they would come out about $1000 ahead every month. Keep in mind also that the heirs can always help supplement the monthly life insurance premiums to help make retirement more comfortable for Mom and Dad.

Life insurance combined with a reverse mortgage is not for everyone, but it is a very innovative strategy for those in the right circumstance who want to safely cash in on the equity in their home during retirement. For further information on this and other ways life insurance can be an effective financial tool, speak with your local independent insurance broker.

Reverse Mortgage Counseling  

Counseling is an important part of the reverse mortgage process. This mandatory step was introduced to protect the consumer and ensure clients are fully aware of  what the reverse mortgage entails. 

Click the link below to find a Reverse Mortgage Counselor near you

reverse mortgage housing counseling agency