It is the American dream – owning one’s own home, and over the years it provides a valuable tax deduction as well as a place to live. But if you are over 62, your home could be a source of income through what’s called a “reverse mortgage.”
A reverse mortgage is a loan that allows you to use your home’s equity to receive cash while you continue to own and live in your home. A reverse mortgage can provide you with money in exchange for your home’s equity and could be a good move for people who are “house rich, cash poor.”
Reverse mortgages are new, but fraught with misconceptions, according to Jamey Nordby, president of the El Paso Mortgage Company. Among the myths are that the lender “cannot wait for me to get out of my house so the loan can be repaid.”
“Absolutely untrue,” Nordby said. “Reverse mortgage lenders are not in the business of selling homes… they are in the business of helping seniors keep their homes and find options that allow them to maintain their financial independence.”
Reverse mortgage borrowers may stay in the home as long as they wish, but if they decide to sell the home, the loan becomes due and payable.
Funds paid to the borrower can be in a lump sum, or in monthly dispersals. It can be used to pay for living expenses, home repair or travel.
To benefit from a reverse mortgage you must be at least 62 years old. Your mortgage must be paid off, or have a low balance, and it must be your primary residence.
Another benefit to the reverse mortgage is that there are no credit or income requirements. Most states do require you receive financial counseling before obtaining a reverse mortgage.
Several agencies provide free information on reverse mortgages. They are: AAPR 292/ 434-6042, www.aarp.org; the National Reverse Mortgage Lenders Association 292/939-1760, www.reversemortgage.org, or the FannieMae Office of Public Information at 800/7FANNIE.
You may also contact the El Paso Mortgage Company at 260-7777, ext 1000.