Sometimes the best thing an agent can do for a client is to not sell their home. Believing that the only way that they can live comfortably is to sell, some seniors are overlooking an option that may be more aligned with their needs and desires. For some, a reverse mortgage is the right choice.
There are many myths surrounding the reverse mortgage product and process. It is important to know some of the facts when speaking with a senior client debating what to do with their home. The minimum age to qualify is 62 and the homeowner must have some equity. This is not a solution for someone who is upside down on their mortgage. A reverse mortgage requires no repayment unless the homeowner moves out or sells the property.
Some of the myths are:
•· "It will affect my Social Security or other government benefits"
•· "I will have to pay taxes on the money"
•· "I might lose my house if I live to long"
•· "I won't be able to pass along my property to my heirs"
None of these statements are true. The proceeds of the reverse mortgage are tax free and do not count towards any income eligibility requirements for government benefits. Once the loan is fully paid out to the homeowner, the homeowner may continue to live in the home. Taxes and insurance must of course be maintained. No one outlives the loan. The house may be passed along just as any other property. The loan must be paid off first.
There are different ways for a homeowner to access the loan
•· Fixed monthly payment for life
•· Fixed payment for a specific term (10, 15 years etc.)
•· Lump sum payment
•· Line of credit
•· Combination of fixed payment and line of credit
A senior can always get more information and a list of lenders from the AARP at their website.
For many seniors, their desire is to remain in their homes as long as they can. As we all know, home means more than just a house.
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