Reverse Mortgage: Makes monthly payments to
you but, you must be at least 62 years old to qualify. Home Equity Loan: You
borrow against the equity in your property. But must be paid back over time. No
age limit.
The
reverse mortgage program![](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_tf6EJQPTC7lGAjRepgDXVsDH6680R7WicGzSyuddcwPimreTCSTIcJ8Y8sv7e3lMBKKlh1hzDnN7JHKhEWgVUpUyGMyj1g_JuCyi7YFS_Bo0rDBRPF-wZfM3qe4KI=s0-d)
is not as "new" as people might think. While it wasn't as well
known or sought after as today the first program of its kind began in the 1960's
where it remained in relative obscurity until the Department of Housing and
Urban Development (http://portal.hud.gov/
hudportal/HUD)
introduced the
federally-insured Home Equity Conversion Program in 1990.The reverse mortgage
continued to gain attention in 1996, when Fannie Mae launched the Home
Keeper.
A reverse mortgage
still continues to be a source of cash flow for seniors looking
to supplement their retirement or add on to their fixed income. As a
retirement planning tool, the reverse mortgage program offers a line of credit
option, which allows the borrower(s) control over how much (and when) the funds
are used.
So what makes a reverse mortgage
different and, essentially, more beneficial to retiring
homeowners than a home equity loan?1.
A home equity loan
does require monthly payments while a reverse mortgage
does not. For example, if you are looking for a source of
increased cash flow that will allow you to cover your debt and (maybe) take a
vacation or two, then a home equity loan is not for you. It will further add to
your debt and stop you from enjoying retirement as you worry about how you will
make payments on this extra monthly expense, which must be paid at the end of a
fixed period.
2.
When a reverse mortgage
becomes due, your heirs aren’t financially responsible for
repayment. For example, if you pass away, but took out a home equity loan,
the loan transfers to your heirs who will have to pay back the loan, plus
interest. With
a reverse mortgage![](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_tf6EJQPTC7lGAjRepgDXVsDH6680R7WicGzSyuddcwPimreTCSTIcJ8Y8sv7e3lMBKKlh1hzDnN7JHKhEWgVUpUyGMyj1g_JuCyi7YFS_Bo0rDBRPF-wZfM3qe4KI=s0-d)
, when the loan becomes due, the primary used for the reverse
mortgage is sold and the equity is used to pay off all the fees and the lender.
Any difference is given to the heirs.
3.
As a non-recourse
loan, you never owe more than the value of your home with a reverse
mortgage. A home equity loan can become difficult to pay, especially as the
interest rises. With
a reverse mortgage![](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_tf6EJQPTC7lGAjRepgDXVsDH6680R7WicGzSyuddcwPimreTCSTIcJ8Y8sv7e3lMBKKlh1hzDnN7JHKhEWgVUpUyGMyj1g_JuCyi7YFS_Bo0rDBRPF-wZfM3qe4KI=s0-d)
, even if the loan surpasses the value of your home, the borrower
is not responsible for repaying the loan in full. You aren’t financially
responsible for the difference, neither are your heirs.
Rick Giese is a
(SRES) Seniors Real Estate Specialist in Southeastern Michigan, in my 27 years
of real estate experience. I have meet a couple of reverse mortgage specialist
who look out for their clients.
Give me a call Rick Giese at
586-242-3100 and I’ll be more than happy to refer you to the reverse mortgage
specialist that will fit your needs or situation best. We do not pressure those
who inquire.
Be sure to like us and follow us on Facebook: https://www.facebook.com/SeniorsRealEstateOfMacombMichigan
Contact
Rick Giese (SRES) 586-242-3100
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