A Reverse Mortgage; For Your Retirement Or Vacation Residence

A reverse mortgage is the perfect strategy  for your retirement or vacation residence. Make no monthly payments and never owe more than the value of the property. Sounds too good to be true?  This time it is true!

Purchase your retirement or vacation home with a Responsible Reverse Mortgage and make no monthly mortgage payments. A reverse mortgage allows you to tap into the equity of your primary residence and use that cash to purchase property with NO payments out of pocket during the entire term of the loan. The loan is paid back when you leave the property for more than 12 consecutive months or the home is sold.

Reverse mortgages operate differently from the standard mortgages that you may be familiar with. Standard mortgages usually require monthly payments that reduce the balance owed or at least covers the interest. Reverse mortgages, in contrast, have no required payments. It’s your choice to pay as much as you like each month or nothing at all.

There are two popular retirement planning strategies involving the use of a reverse mortgage.

Retirement Strategy #1;

Borrow up to half the equity in your current personal residence with a reverse mortgage.  Payoff any current mortgage or use that cash to buy a vacation home or investment property. Enjoy your vacation home now or rent it out part or all of the time. When you are ready to make a permanent move, sell the primary residence.  Pay off the reverse mortgage and move to your retirement residence, without ever having made a mortgage payment.

Retirement Strategy #2;

Sell your current home and double your buying power at your next primary residence with a reverse mortgage. For example, $200,000 down allows you to purchase a $400,000 home. $300,000 down allows the purchase of a $600,000 home. All with NO monthly payment.

Limitations And Protections

Current lending limits are up to $625,000 for FHA approved programs and up to $2,250,000 for Jumbo programs.  Fixed and adjustable rate programs are available and qualifying for a reverse mortgage simply involves demonstrating that you can pay the taxes, insurance and any association fees. All borrowers must be 62 or older. As long as residency requirements are met, there are no term limits and the loan can never be cancelled, no matter what happens to interest rates or the value of the property.

Your protections are built in. Title to the property always remains with the borrower.  The borrower can never owe more than the value of the property. Mortgage insurance covers any shortfall.  There is no requirement to pay the balance owed until the borrower or surviving spouse leaves the residence or passes on.  A surviving spouse may continue to occupy the residence. Upon the passing of the last surviving spouse, family members may purchase the property at 95% of appraised value and the balance owed is extinguished.

A reverse mortgage can be a wonderful tool in planning for the purchase of your future retirement or vacation home. Call me at 239-229-4770 or call the reverse mortgage professionals at Responsible Reverse Mortgage; Nancy Pedone, Vice President of National Sales, 610-496-9249.