Consider a Reverse Mortgage as a
Useful Financial Tool for Retirement
Find out if a Reverse Mortgage is right for you.
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REVERSE MORTGAGE FACTS

REFINANCING MAY NOT BE AN OPTION

Did you know that if you’re 62+ you can use a HECM to purchase a new home or to eliminate your mortgage payment? Why not get tax-free money each month instead of paying out?

The Reverse Mortgage is a tremendously flexible product that can be utilized in a variety of ways for a variety of different types of borrowers. Households who have a financial need can tailor the product to de stress their finances. Households with adequate resources might consider the product as a financial planning tool.

EASY TO UNDERSTAND

A Reverse Mortgage is a mortgage in reverse – that can be hard to get your head around. With a traditional mortgage you borrow money up front and pay down the loan down over time. A Reverse Mortgage is the opposite – you accumulate the loan over time and pay it all back when you are no longer living in the home.

Many experts shunned the product early on thinking that it was a bad deal for seniors – but as they have learned about the details of Reverse Mortgages, experts are now embracing it as a valuable financial planning tool.

FEDERALLY INSURED & TAX FREE

The Home Equity Conversion Mortgages (HECM) is the most widely available Reverse Mortgage. It is managed by the Department of Housing and Urban Affairs and is federally insured. This is important since even if your Reverse Mortgage lender defaults, you’ll still receive your payments.

As a Reverse Mortgage is a loan, the money from it is typically tax-free, whether you receive it as fixed income or in a lump sum.

REVERSE MORTGAGE MYTHS

BANK OWNS YOUR HOME

Not true. With a Reverse Mortgage, you retain home ownership and the ability to live in your home. As such you are still required to keep up insurance, property taxes and maintenance for your home.

REVERSE MORTGAGES ARE EXPENSIVE

False. Compared to other options, reverse mortgages can actually be less expensive in terms of total cost over the life of the loan. Plus, with a Reverse Mortgage you will never owe more than your home’s value at the time the loan is repaid, even if the Reverse Mortgage lenders have paid you more money than the value of the home. This is a particularly useful advantage if you secure a Reverse Mortgage and then home price declines.

CAN'T HAVE EXISTING MORTGAGE

Incorrect. In fact, borrowers can use a reverse mortgage to pay off an 
existing traditional mortgage or even to buy a new house. Since monthly mortgage payments are not required, a HECM for Purchase Loan may help preserve your hard-earned savings and improve cash flow. You will continue to own and maintain the title of your home for as long as the property remains your primary residence and you continue to meet the obligations of the loan.

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Learn More about
Home Equity Conversion Mortgages
Home Equity Conversion Mortgages (HECMs) - the only Reverse Mortgage
insured by the U.S. Federal Government
and available through an FHA approved lender.
Visit HUD Site
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Download Article
The 6.0 Percent Rule

Using HECMs as a Financial Tool
when Planning for Retirement.
The Journal of Financial Planning explores how HECMs
are a tax-free way for home owners to
supplement their portfolio withdrawals.
Read Article
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The New Reverse Mortgage.
A Smart Choice.
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an educational portal produced by the National Reverse
Mortgage Lenders Association (NRMLA).
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