Benefits of a Reverse Mortgage

happy couple hiking on an easy path surrounded by treesThere are many benefits of a reverse mortgage that can be tailored to suit the homeowner’s needs or wants. Homeowners should discuss their particular situation with a reverse mortgage consultant.

Here are a few reverse mortgage benefits, across the board:

  • No monthly mortgage payments. The loan is repaid by the sale or refinancing of the home. (Consumer would still pay property taxes, homeowners insurance and/or HOA fees.)
  • The infusion of money from a reverse mortgage is tax-free income and can be spent in any way the homeowners choose.
  • Qualifying for a reverse mortgage is based on income, assets, monthly expenses and credit history of all reverse mortgage borrowers (much like they do for other types of home equity loans). The financial assessment process is designed to make sure that the applicant can continue to afford property taxes and insurance on their property for the rest of their lives.
  • Fees may be financed as part of the mortgage. The borrower incurs little out-of-pocket expenses to obtain the reverse mortgage.
  • No maturity date. A reverse mortgage becomes due when the borrower sells the home or permanently moves out of the home. A reverse mortgage can also become due if the borrower does not maintain their property taxes, homeowners insurance or reasonable maintenance of the property.
  • No prepayment penalty for FHA-insured HECM loans. These loans can be partially or fully paid off at any time with no additional fees or costs.
  • Asset protection: At the end of the reverse mortgage, the amount that must be paid is the sum of the actual funds received or advanced for fees, plus accrued interest and FHA insurance. The repayment amount will never exceed the value of the home, as long as the property is sold to pay back the reverse mortgage. (Home may be foreclosed upon and equity may be reduced.)


For an individual assessment of your reverse mortgage benefits, get in touch with David Chee.

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