Your Homes Equity Might Be the Key to a More Secure Retirement!
For many years misconceptions and lack of understanding of the true facts and the many uses of the modern HECM mortgage have been hanging around. My role as an educator first is to provide to you the accurate facts, information, details and uses of this truly exceptional financial tool for senior
Lenders have no interest in owning your home and will go to great lengths so that they never will. They want to lend money and make profits on the interest. You always retain title to your home in your name.
The lender adds a lien to the title, to guarantee that they will eventually get paid back the money they lend when the home is sold or refinanced. More on this topic in a bit.
The FHA guidelines for their HECM mortgages were specifically designed to give seniors the ability to live in their home for the rest of their lives. Because the senior usually is the one receiving payments from the bank, not the other way around, they can never be evicted or foreclosed upon for non-payment.
You are required to continue to pay your property taxes, keep the home in good repair and insured against hazards. But you do that now don't you?
The loan contract simply states that the HECM mortgage is due and payable when all of the homeowners have passed away or have not occupied the property for 12 consecutive months. At that point the principal and accumulated interest, fees, etc. is paid, usually from the sale of the home, but not always. Your heirs can inherit the home if that is your wish. The have the same options anyone else has at that point. They can sell, pay off the loan and retain any excess equity. They can refinance to pay off the loan and retain the home as their residence to live in or rent. There are no restrictions on your heirs.
OK, here is one of those "not always" situations I mentioned. This is a non-recourse loan, which means that when it comes time to pay back the bank and if the home is valued for less than the amount owed to the bank at that time, the bank can only settle for the homes market value. Any shortage is not paid by either you or your heirs, that's what the FHA insurance is for. The bank files a claim with FHA and is made whole. Neither you or your estate or your heirs have to write a check to make up any shortfall between the sales proceeds and the amount due to the bank at settlement.
Social Security and Medicare are not affected by a reverse mortgage. Needs based programs such as Medicaid may be affected. Consult your local agencies for details on how a HECM mortgage could impact those programs. The proceeds of a HECM mortgage are not considered to be income by the IRS or State taxing authorities so no income taxes are due.
I truly enjoy meeting and getting to know my clients and their families, so feel free to visit during normal business hours or I can come to you. Just give me a call to set up your appointment.
17550 N Perimeter Dr, Scottsdale, Arizona 85255, United States