Reverse Mortgages
- MCM Mortgage
- Aug 19
- 3 min read
Updated: Nov 10
Know Before You Go!
Reverse Mortgages are only available to homeowners 55 and older, though some states or product types may require you to be a minimum of 60 or 62. Speaking with one of our experienced team members at MCM Mortgage can help determine if a reverse mortgage is a sensible and safe option available for you.
Is a Reverse Mortgage Right for You?
Most consumers widely misunderstand what a Reverse Mortgage is which has created a harsh stigma around reverse mortgages that persists even today.
The truth is, reverse mortgages are a well-regulated financial solution and, for the right borrower, can be a safe and strategic resource for meeting needs, improving your lifestyle, or providing flexibility to a retirement plan.
How Does a Reverse Mortgage Work?
A reverse mortgage converts your home equity into usable cash, similar to a home equity line of credit (HELOC). The unique benefit here is that you DON'T NEED TO PAY BACK THE LOAN BACK MONTH AFTER MONTH.
Instead, you pay it all back at the end.
KEY TAKEAWAYS |
|---|
You don't make monthly mortgage payments |
You live in the house as your primary residence for as long as you like or are able to. |
You still pay your property taxes, insurance, and other property charges, as well as maintain the home |
The balance of the loan accrues with interest which can be slowed by making optional payments. |
How Can I Use A Reverse Mortgage? Is it Really Beneficial?
With the flexibility and freedom that comes from an increased cash flow and additional funds, a reverse mortgage gives you endless options to live more comfortably and pursue the future that's right for you.
Ideas on How to Use Your Reverse Mortgage
Retire early and pay for health insurance until Medicare kicks in
Pay for your children's/grandchildren's education or help your family navigate financial emergencies
Fill financial faps in your retirement plan while avoiding selling assets/investments that are still growing
Maintain a line of credit (that grows) for health emergencies and surprises
Pay for short-term medical emergencies or long-term care
Eliminate credit card debt and avoid new debt
The possibilities of what you can do with a reverse mortgage are endless!
Reverse Mortgage Myths
A lot of people think Reverse Mortgages are "too good to be true" and that there is a "catch 22". However, it's important to remember that the proceeds are in the form of your home equity, and you are simply paying to access that cash.
Like any other loan, the lender charges interest that accrues over time. Since no payments are required, the balance can grow and compound over time. At the end of your loan, the balance will need to be repaid but the amount you or your heirs are responsible for will not exceed the value of the home when it's sold to repay the loan.
Common Reverse Mortgage Myths
MYTH: Everyone says this is a "loan of last resort"
FACT: While a reverse mortgage can be a key resource during emergencies and times of need, borrowers are increasingly using their home equity as a means to unlock more possibilities in their later years, such as using the proceeds to travel the world, by their dream home, or fund a living inheritance.
MYTH: I read online that there are a lot of fees FACT: With the exception of mandatory reverse mortgage counseling costs and FHA insurance (on HECM loans only), the fees for the reverse mortgage are generally the same as those for a traditional forward mortgage.
MYTH: I heard I can't leave my house to my kids
FACT: Several factors, including your home value increasing over your lifetime, can make it possible to pay off a reverse mortgage and still leave your home/equity to your heirs. You can also choose to take less equity out of your home in the beginning, pay down the balance as you go, or simply use a reverse mortgage to establish a line of credit to be used only if you truly need it, which would help you to retain more equity in the home.
Excited About the Possibilities of a Reverse Mortgage?
If this mini guide was informative and has you thinking of all the possibilities you could have with a Reverse Mortgage, it's time to speak with one of our experienced reverse mortgage specialists about your financial goals and help determine which solution is right for you.
MICHAEL RANDLE
Mortgage Broker
MCM Mortgage, LLC
NMLS #1387865
+1 (214) 733-1058
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