Reverse Mortgage – St. Louis Reverse Mortgage
St. Louis homeowners over the age of 62 can reap the benefits of a Reverse Mortgage by tapping into their homes equity to pay for medical expenses, make home repairs or to supplement your income.
Let all those years of timely mortgage payments finally payoff.
With your traditional mortgage, monthly payments are made by you to the lender. A reverse mortgage has the lender paying you. These monies are drawn from the equity you have built into the house and will not have to be paid back for so long as you live in the home. The loan can be paid back when you sell the house, pass away or move to another permanent residence.
What Are My Reverse Mortgage Options?
Three different types of reverse mortgages are available.
- There is the single-purpose reverse mortgage which is typically your least expensive option. These are offered by state and local governments and cannot be found everywhere. The drawback is that the funds can only be used for one specific purpose like home repairs, which is decided by the lending company.
- To give you more ways with how you spend the proceeds of the reverse mortgage there are federally-insured reverse mortgages and proprietary reverse mortgages. These will be more expensive than a traditional mortgage with high upfront costs. You will want to take that under consideration if you only need to borrow a small amount or have plans on leaving the home soon.
- The federally-insured version gets its backing from the U.S. Department of Housing and Urban Development, HUD, and is commonly referred to as an HECM or Home Equity Conversion Mortgages. With this type of loan there are typically no income requirements and the funds can be used for any purpose.
Sean Z knows the specifics of all reverse mortgages and will go over all the details of your options to make sure you get the reverse mortgage that works best for your situation.
How Will I Get My Money From an HECM?
The amount you will be approved for with an HECM depends largely on the amount of equity you have in your home. Basically what that means is they will look at the value of the property versus what you owe on your existing mortgage. The more equity you have, the more money they will be willing to loan you.
To receive your funds, the HECM gives you a number of payments to choose from.
- you can opt for a term loan, which are fixed monthly payments for a specified period of time
- a tenure, which is also a fixed monthly payment but for as long as you are living in the house
- a third option is a line of credit that allows you to draw funds from the loan as you need them for as much or little as you choose until it has been used up.
What you plan on using the proceeds for weighs heavily on how to you decide to be paid. Sean Z can help you go over the options to figure out which one will be most beneficial for your goals.
What Are the Pros and Cons of a Reverse Mortgage?
Consider the positive and negative aspects to a reverse mortgage before making a decision. While this is a perfect plan for many St. Louis residents, it may not benefit every candidate.
- The funds you receive from your reverse mortgage should not have to be claimed as income on your tax return, and should have no bearing on any federal benefits you may receive such as Medicare or Social Security. Consult your tax advisor about this.
- When you tap into your homes equity with a reverse mortgage, you are not signing away ownership. You still retain the title to the house.
- Unlike a home equity loan, there are no monthly payments with a reverse mortgage. The terms of the loan are that it will be paid in full when you pass away or sell the home.
- Interest is being charged to you from the lender. This means that the amount you owe is actually growing monthly. Since you are not paying that interest through monthly mortgage payments, you will not be able to claim it on your taxes like you can with interest paid on a typical home mortgage until the entire debt has been cleared.
- Most reverse mortgages are at a variable rate, not a fixed rate. That means the interest charged on your loan will change as the financial climate does. Depending on how much you borrowed versus the equity of your home, you could end up owing more to the lender than what your home is worth.
Weigh all of these factors carefully before committing to a reverse mortgage. Reverse mortgages aren’t right for every person or circumstance. Sean Zalmanoff can tell you about other options you have if the terms of a reverse mortgage don’t fit with your needs.
You spent years working hard to build equity into your home and deserve to have it now work for you. Make sure you get the best deal out there by consulting with the Sean Z’s Team.