If you’re a homeowner age 62 or older, a reverse mortgage could change your life. It may allow you to safely tap into your home equity while still remaining in your home. You’ll have tax-free* cash without depending on others or burdening your heirs. So you can enjoy the life you so richly deserve. We are dedicated to simplifying the mortgage process and matching solutions to individual needs. Once we understand your goals, we can help you find an appropriate loan program.
The funds can be used for anything, including:
- Paying off debt and or an existing mortgage so you don’t have to worry about payments in your golden years**
- Long-term healthcare and prescription drugs
- Property taxes
- Home repairs and renovations
- Cash reserves for emergencies
How one couple used a reverse mortgage to supplement their income without depleting their IRA savings account.
Mary and John are in their early 70’s and own their home free and clear. The value of their home is $450,000. They both have social security income and withdraw funds from their $300,000 IRA account each month. Concerned about depleting their IRA account, they explored other options for accessing funds. They applied for a reverse mortgage and obtained a line of credit in the amount $198,000. They learned that, for their situation, tax payments were not required on funds they received from the reverse mortgage. This was a key benefit because money pulled from their IRA account was taxable. Getting a reverse mortgage allowed the couple to maintain the funds they wanted available in their IRA account and meet their future cash needs.***
How one person used a reverse mortgage to purchase a new home.
Shauna was in her mid-70’s and lost her husband nearly eight years ago. Finding it hard to keep up the big home she and her husband raised their children in, she wanted to downsize to a condominium. She found a condominium she could purchase for $400,000. She had the option to sell her home and use those proceeds to purchase the condominium without a mortgage and found she didn’t want to go that route. Also, she didn’t want to take on a mortgage payment. Her income was social security and a small pension. She had no savings so she wanted to have more cash available for her future needs. Shauna decided purchasing the condominium with a reverse mortgage would be a good fit. She sold her home for a net profit of $700,000. Her down payment on the condominium was a combination of $218,000 from sale proceeds, plus $182,000 from the reverse mortgage line of credit. This option did not require her to make a monthly mortgage payment. It also left her with $482,000 to put into savings for future use, providing her with the available cash she desired.***
How one couple used a reverse mortgage to eliminate high balance credit cards and secure a new roof.
All too often people move thinking they can’t afford to stay in their home where they have raised their family and made so many friends. Dianne and Mark were in their late 60’s and struggling to meet their monthly mortgage payment of $1,300.00. Their combined income from retirement and social security was $2,200 a month. In order to meet their financial obligations, they used credit cards. When the credit card balances reached $10,000, the couple found it difficult to pay their mortgage and credit card payments. Additionally, they needed a new roof for their home. Based on the value of their home at $500,000, their home loan balance of $99,000 and their age, they qualified for a reverse mortgage. They decided to take out $25,000, which allowed them to pay off the $10,000 credit card balance while providing them with an additional $15,000 to purchase a new roof. Additionally, after the first year, they were set with a $95,000 line of credit to use for any cash needs. The reverse mortgage eliminated their monthly mortgage payment and gave them enough funds each month to live comfortably without using credit cards. Plus, they enjoyed their new roof and were able to remain in their home close to family and lifelong friends.
*Consult your tax professional to determine the tax effect on a reverse mortgage.
**Please consult your financial advisor on the consolidation of short term debt into long term debt. Evergreen Home Loans is not the creditor for reverse mortgage loans.
***This case study is for illustrative purposes only. Your financial situation may be different. Consult a tax professional to understand your situation. Reverse mortgage qualification is dependent on various factors and terms and conditions apply to the loan program. Contact your loan officer for details. At the end of the loan contract, the reverse mortgage balance must be paid in full to retain ownership. Fees associated with reverse mortgages may include an origination fee, mortgage insurance premium, closing costs, and servicing fees, and may be added to the loan balance. Interest accrues on the outstanding loan balance. Failure to pay related taxes, insurance and maintenance, may result in foreclosure. Interest is not tax deductible until partial or full payoff.