What Exactly is a Reverse Mortgage?

by January 21, 2014 • 3 comments
What Exactly is  a Reverse Mortgage?

Simply put, with a typical mortgage you pay some cash down (in most cases), borrow money and use that money to buy a house. With a reverse mortgage, you use equity you have built up in your home and you receive cash while continuing to live in your own home.

Reverse mortgages were created specifically for senior homeowners, 62 years and older, who want to convert part of their home’s equity into loan proceeds. These loan proceeds can be used for many purposes:

• Pay off existing mortgage and eliminate that burdensome monthly payment
• Cover healthcare costs
• Pay taxes and insurance
• Make home modifications
• Build a reserve fund for emergencies
• There is even a reverse m0rtgage that allows you to purchase a new home

The reverse mortgage has many benefits:

• No monthly principal and interest mortgage payments
• Retain ownership of your home provided you continue to live in the home as your primary residence, maintain the home in good condition and pay property related fees, taxes and insurance.
• Maintain self reliance
• Insured by the Federal Housing Administration (FHA)
• Reverse mortgages are non-recourse loans. This means that there is no recourse to you, your estate or your heirs if the loan balance exceeds the home’s value at maturity as long as you or your estate sell the property to pay off the debt.

There are many flexible options available to receive funds:

• Line of credit, which allows you to draw on loan proceeds as needed. This can be a great option for the cash buyers that are retiring to the beach. Establish a line of credit to have funds available if needed. If you don’t need the money, keep a small balance on the line to minimize your interest expense.
• Fixed monthly payments for a set term
• In a lump sum
• Or a combination of the above

Counseling by an independent, third party, FHA approved counselor is required to ensure consumer’s knowledge of program costs and other possible options.

Reverse mortgages are specialized and have several structure options available. At Bank of England we are pleased to have a lending partner that specializes 100% in reverse mortgage lending. Contact me with any questions or if you would like a free consultation. Mike Tarleton 850-866-2963 or mtarleton@englending.com, call anytime.

Mike Tarleton
Sr. Mortgage Loan Officer, NMLS: #264821Logo with picture - beach
Bank of England, NMLS #418481
5410 E. Hwy 30-A, Suite 212
Santa Rosa Beach, FL 32459


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1 Steve LaForge February 6, 2014 at 11:00 am

Let’s say you borrow the full equity of the house with a 10 year term. What happens when the note comes due and you are still living? Do you get booted out of your house?


2 Mike Tarleton February 6, 2014 at 11:11 am

Steve, With a reverse mortgage, you borrow against the equity you have established in your home and do not need to repay the loan for as long as you live in the home as your primary residence, maintain your home in good condition, and pay property taxes and insurance. You can live in your home and enjoy making no monthly principal and interest mortgage payments.


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