Why Consider a Reverse Mortgage?

If you’re 62 years old or older, own the home in which you live and need additional cash to maintain a comfortable lifestyle, a reverse mortgage may be just what you need. Why do they call it a reverse mortgage? It is called a reverse mortgage because you cash in on the equity of your home without having to make any payments on the loan unless you move or die. Basically you are borrowing from the end of your loan similar to the way you would do if you were obtaining an extension on a loan payment.

There are no restrictions on the way you use the funds from your reverse mortgage loan—you can pay off existing debt, take a vacation, buy a vacation home, give it to your children or save it for a rainy day. If you have the option to take payments, you can leave the money until you need it unless you choose a fixed rate reverse mortgage that requires you to accept all of the funds at closing. An adjustable rate reverse mortgage allows you to take the cash in increments, and you will only pay interest on the money you actually borrow from your reverse mortgage.

None of the funds from your reverse mortgage are taxable. Thus if you need an extra $2,000 monthly to support your lifestyle you will only pay taxes on your actual income sources such as pension, Social Security, 401K or any other taxed sources of income. You can choose the amount of cash you want each week, month or however you set it up with your reverse mortgage lender. Even if you still owe on your home you can obtain a reverse mortgage but you will need to provide first lien to your reverse mortgage holder. What this means is you will need to pay off your first mortgage with funds from your reverse mortgage first thus providing clear title to your property and the reverse mortgage being the only lien.

Current limits on reverse mortgages are $625,500 but that figure is only good until the end of 2010. There is some speculation it will return to the previous figure of $417,000 but there is also a possibility it will be extended or another figure will be put into place. If your home falls into the upper-priced category and you feel you might be entitled to the full amount of the limits, you want to move quickly before the current limits expire. Keep in mind that the amount to which you are entitled is based on your age, the interest rate and the equity in your home. The average for a reverse mortgage is between 40-75 percent of your home’s equity and increases as you grow older.

The limitations are national and will not change because of where you live. The only thing that will differ based on your location is the value of your home and the individual lending policies of your reverse mortgage lender. The older you are the more money you will be able to obtain in a reverse mortgage.

At Alpine Mortgage, we specialize in providing reverse mortgage loans. If you have any questions regarding reverse mortgage loans or are interested in applying for one, call us now at (800) 876-LOAN or click here to have one of our reverse mortgage loan specialists contact you.

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