Reverse Mortgages

REVERSE MORTGAGES

• What is a Reverse Mortgage?

A reverse mortgage is a loan that allows you to take advantage of the hard-earned equity in your home to increase your cash flow, improve your lifestyle or get you closer to financial independence.  eligible seniors can receive a single cash payment, monthly income or a line of credit without the worry of a monthly loan payment.  The best part is that you can take advantage of these funds TAX FREE as long as you live in your home.

A reverse mortgage is the result of a government-sponsored program.  There are limitless possibilities on what you can do with the money you receive.  Make your "golden" years truly golden by putting to work the home equity you've created.  You can finalize those travel plans, or help your grandchildren realize their dreams of a college education.

You'll want to consult your First Windsor Mortgage mortgage specialist for all the details, but the main eligibility requirements are simple - you need to be at least 62 years of age and own and live in a home.  If you meet these criteria, and want a tax-free way to improve your financial standing, plan on talking to a reverse mortgage specialist soon.

• Foreclosure: Get the Second Chance You Deserve

Things don't always go as planned.  If you have fallen behind on your mrotgage payments, have been served legal papers relating to your home ownership or count yourself among those unfortunate enough to be facing a foreclosure, a reverse mortgage might be the right answer for you.  We may be able to help you rectify the situation quickly to avoid court action.  Even if the courts are already involved, we may be able to step in to provide a resoltuion that will satisfy the courts, the bank and, most importantly, you.

We know you've done what you can to meet your financial responsibilities and still provide a home for yourself. Why let a small misstep or two deny you the comfort of living in the home that you've worked so hard for over the years?  Not only can a reverse mortgage save your home and allow you to live in it as long as you want, but it will allow you to eliminate the monthly payments that have been so tough to make lately.

Refinancing with a traditional, forward mortgage might also save your home and improve your financial situation, but it leaves you in that same old monthly payment routine.  Plus, it may be tough to secure that mortgage if your credit rating has recently suffered, or you may pay outrageous interest rates for a high-risk loan.  Over the years, you've built value into your home in the form of equity.   With a reverse mortgage you get to take full advantage of that equity and get out of the monthly cycle of payments.

Why did you buy a home in the first place?  Pride, respect, comfort and security are all benefits of home ownership.  We can help you protect your home and the great feelings that come with owning your own home.  Don't make another mortgage payment, and don't give up on living in the home you deserve.  Consult a First Windsor Mortgage reverse mortgage specialist today to see if a reverse mortgage is the right move for you.  That second chance is yours - claim it.

• Tax Advantages: Everyone Can Win

If you're like most people who are looking into a reverse mortgage, you are not only thinking about yourself and your investment in your home, but also about what you're going to pass on to the next generation.  "Am I making the right move for me and my children?" is the question you'll want to answer correctly.

Chances are, your adult children have their own home (or homes).  While they may have some fond memories of the house they grew up in, it is not how they will remember you when you've gone.  They'll latch onto a favorite piece of jewelry or a well-appointed chair you always sat in while reading to the grandkids.

Especially if you have more than one child, you should look at your home as an investment  you will pass on to them rather than a family heirloom.  And you want that investment to have the greatest possible return, right?  A reverse mortgage on your home may hold some tax advantages for you now as well as tax advantages for your heirs once you're gone.

Without a reverse mortgage, a property might not have any liens and, therefore, the entire worth would be considered when applying the estate inheritance tax.  So, by using a reverse mortgage, you have placed a lien against some of the home's value, in turn decreasing the taxable portion of the estate immediately.  Also, any interest that has accrued over the years will also be deductible upon repayment, and can also reduce some of the estate taxes that your heirs might face.

Ultimately, you need to contact your financial advisor or tax advisor to see if these advantages can be applied to your personal situation.  But you may find that a reverse mortgage provides a tax-free income for you today and a tax break for your heirs when the time comes.  Contact your First Windsor Mortgage reverse mortgage specialist today to learn more.

• Common Reverse Mortgage Questions & Answers

Q: Aren't reverse mortgages for seniors who have fallen on hard times?   

A: Reverse mortgages can help seniors in all financial situations.  Maybe you need help with day-to-day expenses.  Perhaps your adult children are doing fine financially and would rather see you enjoy the equity value in your home.  Whatever your situation, reverse mortgages allow you to easily turn equity into cash or credit without worrying about loan repayment.

Q: How do the funds from a reverse mortgage affect my ability to collect Social Security, Medicare or pension benefits?    

A: The short answer is they don't!  Proceeds from a reverse mortgage are not need-based, so you will still be able to collect these benefits as you normally would with very few exceptions.  Consult your plan administrator for details.

Q: What about my SSI or Medicaid benefits?  How will those be affected?    

A: Monthly income from a reverse mortgage does not affect most means-tested benefits as long as the cash advances are spent each month and not accumulated or the available funds are in the form of a line of credit.

Q: What are the initial costs associated with a reverse mortgage?                       

A: As with any mortgage origination, the borrower is responsible for closing costs including charges by the title and escrow companies, as well as origination fees.  All of these costs can be financed as part of the initial loan advance.  These fees are also regulated by the federal government so your interests are protected.

Q: What if my spouse is under age 62?    

A: Your spouse will not be eligible to participate in the reverse mortgage.  All individuals listed on the title must be 62 or older to be eligible for the reverse mortage.

Q: When do I (or my heirs) have to repay the loan?                                                                                          

A: The loan comes due when you move out of your house, sell your house, or within 12 months of your passing.  If two spouses are listed on the loan, the loan comes due when the second spouse meets any of these circumstances.

Q: What is due when the loan is repaid?                                                                                                            

A: You will be responsible to repay the principal amount received plus accumulated service fees and accrued interest.

Q: What if I owe more than my home is worth?                                                                                              

A: that's OK.  Reverse mortgages are designed as "non-recourse" loans, which means that you will never owe more than the value of your home, regardless of loan balance.

Q: Must my home be sold after my passing to repay the loan?                                                                        

A: No.  If your heirs decide to keep the home, the reverse mortgage can be easily refinanced with a traditional mortgage on the home.

Q: What are my responsibilities after I take out a reverse mortgage?                                                            

A: Since you retain the title to your home, you don't need to do much more than you are certainly doing already.  You are expected to pay all taxes on the property and carry sufficient insurance to protect your home.  Add in reasonable maintenance of your home and regular termite inspections, and that's it - basically the normal stuff for a responsible homeowner.

Q: How can this income be tax free?                                                                                                                   

A: The IRS currently treats reverse mortage proceeds as loan advances rather than taxable income.  If you use the funds to purchase an annuity, you may, however, create a tax liability.  Be sure to consult your tax advisor on your specific situation.

Q: Can the interest charged on my loan principal be deducted for tax purposes?                                        

A: The interest acrues and will be tax-deductible when the loan balance and interest are repaid.

Q: How can I be sure my home will qualify for a reverse mortgage?                                                               

A: Most homes do qualify.  Secondary residences or vacation homes do not qualify.  Also, mobile or manufactured homes without an approved foundation do not qualify.