Reverse Mortgages Made Simple
Program Lets Older Americans Tap Into Home Equity for Emergencies and Improved Quality of Life
COLUMBUS, Ohio - March 31 2008 - As Americans turn a cautious eye toward the economy, many consumers age 62 or older find themselves “house-rich and cash-poor” — they have plenty of equity in their homes, but they’re living on fixed or limited incomes.
For many seniors, a “reverse mortgage” may be an ideal option to convert their home into a source of income without losing home ownership.
Reverse mortgages let homeowners age 62 and up convert part of their home equity into tax-free income. Payouts can come as a lump sum, a monthly cash advance, a line of credit, or a combination of these options
A recent AARP survey found that 93 percent of reverse mortgage borrowers said this approach had a positive effect on their lives.
“Social security and pensions just don’t go far enough any more,” explains Nancy Isaacs, a reverse mortgage specialist with Residential Finance Corporation. “Reverse mortgages help homeowners supplement their retirement incomes and enjoy carefree, active lives.”
The Nuts & Bolts: How Reverse Mortgages Work
In contrast to traditional “forward mortgages,” lenders make payments to borrowers during the term of the loan. The homeowners will never have to make a payment as long as they occupy the home. The proceeds are tax-free and can help eligible homeowners generate cash for out-of-pocket expenses. And unlike a car loan and other traditional loans, the homeowner retains title to the home, so there’s no fear of losing the home.
More than 400,000 seniors have tapped reverse mortgages nationwide since the program’s inception, according to a report from the U.S. Department of Housing and Urban Development. 2007 saw a 40% increase in reverse mortgages as seniors looked to take advantage of this useful income tool.
Borrowers who still owe money on a first mortgage are eligible for the program in most cases, depending on their home’s current value and the outstanding balance on their original loan. A reverse mortgage allows a homeowner to pay off the balance of the first mortgage, eliminating the burden of monthly payments.
Reverse mortgages are non-recourse loans, which means that even if the seniors live beyond their life expectancy, neither they nor their heirs will owe additional money to the lender when the home is sold and the loan balance comes due.
Helping Seniors Remain Independent Longer
An estimated 9.8 million older Americans have an impairment that makes it difficult to live at home, according to the National Council on the Aging.
Reverse mortgages can help many of those homeowners pay for long-term care and remain independent in their homes longer. Many seniors use the funds for accessibility upgrades, such as wheelchair ramps, in-kitchen workstations, and chair lifts.
“Reverse mortgages take the financial worry out of your Golden Years,” says Julie Freyermuth, a mortgage lender at Residential Finance Corporation. “The cash generated with a reverse mortgage gives seniors greater freedom and flexibility with their spending.”
How Seniors are Using Reverse Mortgages
– Pay off existing debts
– Help cover living expenses
– Pay for home repairs and renovations
– Pay for healthcare and medications
– Purchase a new car or pay for car repairs
– Finance a vacation
Counseling Helps Homeowners Make Smart Decisions
All seniors contemplating a reverse mortgage receive guidance from an independent, government-approved housing counseling agency. The counselor will explain the pros, cons and implications of a reverse mortgage.
If you are interested in how a reverse mortgage can provide money for emergencies and improve your quality of life, contact Residential Finance Corporation at 614.827.1368 or online at www.residentialfinance.com.
Contact:
Residential Finance Corporation
614.827.1368
freyermuthj [at] myrfc.com
http://www.residentialfinance.com/
SOURCE Residential Finance Corporation