You’ve worked hard, saved when you could, and you’re ready to enjoy the retirement you’ve always dreamed of. Now it’s time to make some decisions about your future — a future that should be free from worries about having enough money to do the things you want to do. Some people get home equity loans to help them be prepared for unexpected expenses, pay for health care costs, or to make home improvements. However, a new loan option is growing in popularity among homeowners age 62 and older — the Home Equity Conversion Mortgage (HECM). Also called a Reverse Mortgage Loan, a HECM may be a better home equity loan solution for older Americans, because it eliminates the need for monthly mortgage payments.*
Why a Reverse Mortgage Loan?
Find a new home
In 2008, the US Federal Housing Administration enacted legislation in response to the housing market crash allowing seniors to use a reverse mortgage loan to purchase a home.
UNLOCK YOUR EQUITY
Reverse mortgage loans allow eligible home owners to use their equity as cash, monthly income or a line of credit, depending on qualification.
Be worry free
By using a reverse mortgage loan, people get rid of what is typically their largest bill — the monthly mortgage payment. It also can help relieve the burden on those who are helping cash-strapped seniors get by.
The Important Stuff
WHAT TO KNOW
Retain title to your home
You can pay off any existing mortgage on your home.
No monthly mortgage payments*
Closing costs and most fees can be financed.
Loan proceeds are not taxable.**
Social Security and Medicare benefits are not affected.***
Reverse mortgage loans are generally non-recourse loans. This means that you and your heirs are not personally liable for any portion of the mortgage debt that exceeds the value of your home, even if your home decreases in value.
Any remaining equity after the HECM is paid off belongs to you or your heirs.
not for everyone
The loan balance increases over time as interest on the loan and fees accumulate.
As home equity is used, fewer assets are available to leave to your heirs. You can still leave the home to your heirs, but they will have to repay the loan balance. Usually, the loan is paid off by selling the home. However, this can be done using other funds or through a traditional mortgage.
Typically, fees are higher than with a traditional mortgage.
Due to the associated fees, a HECM is not a good option if you plan to move soon.
Eligibility for needs-based government programs, such as Medicaid, may be affected. Consult a benefits specialist.
The loan becomes due when a maturity event occurs, such as the borrower passes away, the home is no longer the borrower’s principal residence, or the borrower vacates the property for more than 12 months due to mental or physical illness.
How much you can receive
The amount that is available generally depends on four factors: your age, the current interest rate, the appraised value of the home and government-imposed lending limits. For a free estimate of how much you may qualify for, click the button below. You will be contacted by a licensed HECM Mortgage Advisor from Gapital Mortgage.
*Borrowers are responsible for property taxes, homeowners insurance and property maintenance. A HECM is a home-secured debt payable upon default or a maturity event.
**Not tax advice. Consult a tax professional.
***Consult a financial professional. Visit www.ssa.gov.