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Reverse Mortgage Guide

Free Reverse Mortgage Guide

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

FREEandCLEAR Reverse Mortgage Guide

Free Reverse Mortgage Guide
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Top Reverse Mortgage Benefits

1

Eliminate Your Mortgage Payment

A reverse mortgage enables you to pay off your existing mortgage and eliminate your monthly mortgage payment. Instead of making a monthly payment, the interest on your reverse mortgage is added to your mortgage balance. So your loan balance increases over time but you never make a monthly payment on your reverse mortgage which is a significant financial benefit for borrowers.

2

Improve Cash Flow

By eliminating your mortgage payment and potentially using your loan proceeds to pay off other debt, a reverse mortgage can significantly improve your monthly cash flow. Your mortgage payment is typically one of your largest monthly expenses so cutting that out and reducing other debt can boost your cash flow by thousands of dollars.

3

Financial Freedom

A reverse mortgage can provide financial relief for borrowers who are struggling to make their mortgage payment and pay their bills. A reverse mortgage enables you to use the equity in your home to pay off your current mortgage, pay down debts and increase your financial cushion. When understood and used properly, a reverse mortgage offers significant financial freedom for borrowers.

4

Use the Money How You Want

Reverse mortgage borrowers are required to pay off any existing mortgage balance on their property but there are no limits on how borrowers use the remaining proceeds from their loan. Many borrowers choose to pay-off credit card bills and other debt but some use the proceeds to remodel their home, travel the world or pay for college tuition for a child, grandchild or even themselves! How you use the proceeds from a reverse mortgage is up to you.

5

Tax Free

A reverse mortgage is tax-free way to access the equity in your home. In many cases selling your home or taking out a large home equity loan can be a taxable event. For example, selling a home you have owned for decades may trigger a large capital gains tax if the property value has increased significantly. The proceeds from a reverse mortgage are tax free which provides a real financial advantage to many borrowers. We always recommend that you consult a tax professional to understand the tax consequences of a reverse mortgage.

1
Save Time & Money

Our insider tips enable you to save time and money on your reverse mortgage. Learning how to compare proposals and lower your closing costs can save you thousands of dollars

2
Be Informed

Our 40+ year mortgage expert explains how reverse mortgages work and outlines the pros and cons. Be informed so you can determine if a reverse mortgage is right for you

3
Free & No Obligation

Our guide is 100% free and there is absolutely no obligation for borrowers. Our guide is a valuable information resource for anyone thinking about getting a reverse mortgage

Five Things You May Not Know About Reverse Mortgages

1

You Keep Ownership of Your Home

Borrowers who obtain a reverse mortgage maintain ownership of their home. Although a reverse mortgage enables you to pay-off your existing mortgage and eliminate your monthly payment, you do not lose ownership of your property. Maintaining ownership of your home enables you to pass it down to your heirs although there may be less equity in the property when you do.

2

You are Required to Pay Ongoing Housing Expenses

Although you do not make a monthly mortgage payment with a reverse mortgage you are still required to pay ongoing monthly housing expenses such as property tax and homeowners insurance. Borrowers are also responsible for the general upkeep and maintenance of the property. This is an important point for borrowers to understand because the failure to pay ongoing housing expenses can result in default and foreclosure.

3

You Can Buy a Home with a Reverse Mortgage

Most people use reverse mortgages to pay off the existing mortgage on their current home but you can also use a reverse mortgage to buy a home. Using a reverse mortgage to buy a home is different than using a reverse mortgage for a refinance so borrowers should understand how each method works. Using a reverse mortgage to buy a home requires a much larger down payment (~%50) than a using a regular mortgage to buy a home (~20%) but provides a potentially compelling financing option for borrowers who want to buy a home without the obligation of a monthly mortgage payment.

4

There are Different Types of Reverse Mortgages

Just like with a regular mortgage, there are different types of reverse mortgages. Borrowers can elect a fixed rate reverse mortgage or an adjustable rate reverse mortgage. A fixed rate reverse mortgage provides borrowers with certainty that their interest rate will not increase while an adjustable rate reverse mortgage provides borrowers with more disbursement options and enables them to take out more proceeds from the loan. Borrowers should understand their reverse mortgage options and work with their lender to select the program that is right for them.

5

A Reverse Mortgage Has No Set Length

A reverse mortgage does not have a set length like a regular mortgage. Instead, a reverse mortgage lasts as long as the borrower resides in the property. A reverse mortgage can last ten years, 33 years or potentially longer. Borrowers are required to pay off the reverse mortgage loan balance when they vacate the home for reasons such as selling the property or because the borrower moved into an assisted living facility for more than a year. Borrowers can also choose to pay-off the reverse mortgage at any time by refinancing it or by using their own funds to pay off the loan balance.

Sources

Reverse Mortgage Program: https://www.consumerfinance.gov/ask-cfpb/what-is-a-reverse-mortgage-en-224/

About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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