What Is a Reverse Mortgage?

Mary Spencer, Home Loan Consultant, Univest Bank and Trust Co.

A reverse mortgage can allow homeowners 62 years of age and older to tap their home's equity without selling their homes. This is great news for retirees who may not qualify for home equity loans or refinanced mortgages, yet may be faced with rising health care costs, utility and tax costs, credit card and mortgage debt, and insufficient retirement funds. In most cases, the homeowner does not want to move, but these costs are pushing them out. A reverse mortgage may be an option to consider.

With a reverse mortgage, homeowners with a certain percentage of equity in their homes can borrow against that equity and use the loan money for any purpose. Homeowners are not subject to any specific income or credit requirements to qualify to receive reverse mortgage loans because the loans are secured by the equity in the home.

Unlike conventional mortgages, reverse mortgage borrowers are not required to make monthly payments to repay the loan. The loan is repaid when you cease to occupy your home as a principal residence, whether you sell the home, permanently move out or pass away. If the amount remaining on the loan at that time is less than your home's value, the difference is given to you or your estate. You will never owe more than the amount your house is worth, and the lender cannot seek repayment from your income, your assets or heirs' assets. In other words, there is no personal liability – typically the sale of the house is what repays the reverse mortgage loan.

The amount available depends on the appraised value of the home, the borrowers' ages and current interest rates. Seniors who take out reverse mortgages retain ownership of their homes. The benefits available can be received in a lump-sum payout, line of credit or monthly payment and can be customized to meet a homeowner's specific financial needs.

Reverse mortgages may not be for everyone. There are a number of fees that can reach up to thousands of dollars. In all cases, these may be financed as part of the reverse mortgage. If you're thinking of leaving your home to family members, remember, just as the home becomes part of the estate, so too does the debt and it must be repaid once the home is sold.

If you are 62 or older and own a home, you may qualify for a reverse mortgage on your primary residence. Contact Mary Spencer, Reverse Mortgage Specialist for Univest Bank and Trust Co., at 267-994-7638 or email for additional information and to see if a reverse mortgage is the right solution for you.

   Univest Bank and Trust Co. is an Equal Housing Lender.   

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