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Savvy Seniors Have Found a New Solution for a Comfortable Retirement

Over the last few years a new kind of mortgage, available only to those over the age of 62, has taken center stage as a retirement planning tool. Once considered a resource for the “house rich and cash poor”, the Home Equity Conversion Mortgage (HECM) or Reverse Mortgage, is now being used by every category of senior to meet their financial goals and maintain their lifestyle. A Reverse Mortgage helps seniors add to their retirement income with the ability to access home equity without a monthly payment*. They are able to increase precious retirement cash flow by paying off their current mortgage. Others will just use some of their hard-earned cash from the equity in their home for special projects, or really, anything they want. Congress started this program in 1984, and later developed the current Home Equity Conversion Mortgage program. This FHA/HUD program is government guaranteed and insured, making it a great, safe financial tool, now available to those 62 years and older. All without the need for income or credit qualification! A Reverse Mortgage works just like your forward / conventional mortgage – except in reverse. The lender gives you money from the equity in your home, but without a monthly payment*. Instead of you paying the lender, the lender is paying you! Reverse Mortgage proceeds are made available to you in any combination of three forms: A lump-sum payment A line-of-credit that grows every year A regular monthly check. You keep title to your home, you live in your home, and the mortgage amount, together with interest, is due when you sell the house or permanently stop living in the house (as your primary residence.) At that point you or your heirs will either pay off the loan, keep the house, refinance, or sell the house, at which time the loan balance will be paid out of the proceeds of the sale. If the house doesn’t sell for enough to pay the loan, your heirs can walk away – they, or you, will never owe more than the house is worth. Since the Reverse Mortgage is insured by the FHA, it’s guaranteed that your estate does not pay more than the value of the home at the time of the sale. The loan only attaches to the house -not to you or your heirs. There are no limits on how you can use the proceeds from the Reverse Mortgage. Some typical uses are: Home improvements or repairs An emergency fund for future, unforeseen bills Contribution to your children or grandchildren’s’ college education Purchase of long term care insurance Even take your dream vacation! Anything YOU want to do! You decide to let the house work for you, instead of you working for your house. The older you are and the higher your home value, the more money you can borrow. So, rather than selling your home to get the money you need, or being saddled with a home-equity loan payment that will probably outlive you, a reverse mortgage may be the right choice for you. *Please be advised that while you will have no obligation to make monthly mortgage payments with the HECM, you are still responsible to pay real property taxes, homeowner’s insurance, and to maintain the property.