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What Is a Reverse Mortgage?

What Is a Reverse Mortgage?

 

Are you hitting that age where you’re thinking about retiring? Are your eyes set on finally not having to worry about work? As they should be! If you’re hitting that age range of 62 or above, it’s time for you to take a load off, right? So what’s stopping you? Financial stability is usually the reason why. For seniors 62 and up, it’s nerve-racking thinking about whether or not you’ll have enough money to live on. Not having enough money to live off of after retirement, it’s a serious issue that many run into. However, the solution to your worries is most likely right under your nose! We’d like to suggest this simple solution that turns your home’s equity into cash. If you’re an established person of 62 years or older, chances are you’re sitting on a lot of home equity that can be put to good use, and you barely need to lift a finger to get money for it. If you want to live a care-free retired life with enough money to live off of, but aren’t sure how to get that money, consider a Reverse Mortgage

 

Reverse Mortgage Defined

 

So, what exactly is a Reverse Mortgage? Simply put, a reverse mortgage is a type of loan. This type of loan allows homeowners to convert their home equity into cash they can have, with no monthly mortgage payments. Essentially, you borrow money against the value of your home and receive a lump sum, fixed monthly payment, or line of credit. But how do you pay this mortgage back? This type of mortgage is able to be paid back when the homeowner dies, moves away, or sells the home. 

 

This is a great option for seniors that don’t have enough money in savings, but are looking to retire without worrying about money. If these seniors have a lot of equity tied to their house, they can put it to use. Seniors may not have as much money as they thought they’d need saved up, but chances are their house is worth a whole lot of money. Doesn’t this loan sound like a great way to make a lot of money with very little effort? Slow down there, don’t get too ahead of yourself. This type of mortgage is not so “cut-and-dry”. Unfortunately, these types of mortgages can be confusing and complicated, thus making them more susceptible to being used as scams. It’s sad to see mortgage companies taking advantage of elderly folks looking for ways to live comfortably. In this blog post, we’ll help you better understand how a reverse mortgage works, what it can do for people looking to retire, and how to avoid scams that are looking to take advantage of you for your home’s equity. 

 

How a Reverse Mortgage Works

 

Normally, with a loan, the homeowner would be making payments to the lender. However, with a reverse mortgage, the lender makes payments to the homeowner. It’s pretty much a normal mortgage, but reversed (just like the name says)! With this type of loan, the homeowner can choose to receive payments in one of six ways. The only thing they need to pay interest on is the proceeds. Nothing is paid upfront since the loan is rolled into a loan balance. Homeowners are able to keep the title to their home, but, over time, the borrower’s debt increases while their home equity decreases. 

 

happy older couple

With this type of loan, the home acts as collateral. Let’s say the homeowner moves or passes away, what happens next? Well, all proceeds from the residency’s sale go directly to the lender to pay off the reverse mortgage. Any proceeds to go beyond what was borrowed from the borrowers will be given back to the homeowners. One important thing you should know is that reverse mortgage proceeds are not taxable. Homeowners may see it as income, the IRS sees that money as a loan advance. 

 

When a reverse mortgage is taken out by a homeowner, they can choose to be paid in one out of six ways, but you’ll need at least 50% equity to qualify for this type of mortgage: 

 

  • Line of Credit: Money is available to borrow as it is needed. The homeowner does, however, pay interest on the amounts borrowed from the credit line.
  • Equal Monthly Payments: As long as one of the homeowners is alive, the lender will still make monthly payments to them.
  • Term Payments: The lender gives the homeowner steady monthly payments for a set period of time, which the homeowner can choose (i.e. 15 years).
  • Term Payments + Line of Credit: The lender gives the homeowner steady monthly payments for a set period of time, which the homeowner can choose (i.e. 15 years). If the homeowner needs more money, they can access the line of credit.
  • Lump Sum: This is simply getting all proceeds at once when the loan closes. Lump Sum comes with a fixed interest rate, while the other options have adjustable interest rates.
  • Equal Monthly Payments + Line of Credit: The lender provides monthly payments as long as there is at least one homeowner occupying the residence. If the homeowner needs more money, they can access the line of credit.

 

Reverse Mortgages can always be tricky business, so how do you know if you’ll benefit from applying for one? Let’s talk about that! 

 

Will I Benefit from a Reverse Mortgage?

 

A reverse mortgage sounds like a great way to turn your home into equity, right? Don’t be so quick to jump to conclusions! This type of mortgage isn’t for everyone, it’s essential to look at all the details and consider all your options. Let’s talk about who can benefit from these kinds of mortgages and whether or not it’s right for you. 

 

Reverse mortgages are very similar to line of credit and home equity loan in the same way that all of these can provide a lump sum/line of credit that can be accessed by the borrower as needed based on how much of the home is paid for and the home’s market value. The main difference between reverse mortgages and a line of credit/home equity loans is that the borrower does not need a source of income or good credit. The borrower also won’t make any sort of loan payments while they still have residency in the home they’re acquiring this loan for. Most of the time, seniors apply for reverse mortgages if they want to access their home’s equity without selling it. Let’s weigh out the pros and cons of moving forward with a reverse mortgage:

 

Pros of Reverse Mortgages:

 

  • Once a person becomes 62, a person is able to put their home’s equity to better use. They’re able to make money off the equity they’ve built up over the years of owning a house. 
  • It’s a great way to acquire money to meet basic living necessities without having to continue work. 
  • Great for people that want to continue living in their home, while also putting the equity to good use.  
  • Perfect for homeowners looking for long-term financial stability. 

 

Cons of Reverse Mortgages:

 

  • A person has to spend a significant chunk of their equity that they’ve accumulated over the years. 
  • The home will most likely not be able to be passed down to children, grandchildren, or friends since the lenders will acquire the proceeds to the home. 
  • Bad for homeowners looking for short-term financial solutions. There’s too much to sacrifice if you’re looking for short-term solutions. 
  • If someone lives in the house with you (friend, relative, roommate, etc.), they will not have the right to live there anymore after the main borrower passes away. Only the borrowers significant other will have the right to live there, so long as they are able to carry out the mortgage. 
  • If a person outlives their proceeds, they won’t have enough equity to support themselves anymore. If the borrower has expensive taste, but winds up spending more money than they think they have, they could wind up in some serious financial trouble. 

 

When it comes to reverse mortgages, it’s important to consider all the details we’ve discussed. Weigh out all the pros and cons and ask yourself, “Is this going to provide me with long-term financial stability?” People tend to misuse reverse mortgages and wind up losing, not only their home equity, but so much more. If you use this loan wisely, you can put your home’s equity to use, live a carefree life in retirement, and not worry too much about financial stability. Reverse mortgages can be a great way for retired seniors to still make some money without actually working. However, it’s best for you to consider all your options before deciding on a mortgage like this. Loans like these can help some, but can destroy others. 

Tammy Hetrick
Tammy Hetrick
23:39 12 Sep 22
Friendly service. Great chips and salsa. We came for the margaritas. We've been here a few times for dinner and always enjoy the food.
David Stanley
David Stanley
23:05 12 Sep 22
Spam company, keeps calling and texting to buy a home that I don't own & won't stop
Mike Straub
Mike Straub
23:33 29 Aug 22
Kip came over & offered to steal my beautiful home for a terribly low price, then made an appointment to come back with his partner a few days later, but didn't show up or even call to let us know he wasn't coming
Tyler Smith
Tyler Smith
22:19 04 Jul 22
An amazing team to do business with! Highly recommend!
Tiare Johnson
Tiare Johnson
15:50 08 Jun 22
I didn’t have to worry about a real estate agent, closing costs, & a lot of things that you have to take care of when you sell a house in a traditional way. I like the fact that it was fast, easy, & everything went great! Jamie is fantastic to work with!
Christopher Jenks
Christopher Jenks
19:38 31 May 22
Very communicative and trustworthy group of professionals. The selling process was transparent and fast. Definitely worth considering...
Karen Wheeler
Karen Wheeler
18:31 22 May 22
Great team to deal with
Kailey Bowman
Kailey Bowman
07:08 22 May 22
Mo F
Mo F
23:51 20 May 22
We had an awesome experience!! Jamie Kirk is amazing and made our experience great!!
Jcbbowman1987
Jcbbowman1987
18:42 20 May 22
The best in the business!
peter maiers
peter maiers
04:13 20 May 22
Easy fast and I trusted them ever step of the way !! great team of people all interested in doing everything correctlyPeter B
Connie Bowman
Connie Bowman
02:38 20 May 22
Fantastic Company!
Britne Salsbury
Britne Salsbury
02:34 20 May 22
Casey and his team and are amazing! They are organized and have great follow up. A really great group of people to work with!
Denise Klein
Denise Klein
01:43 20 May 22
Casey Ryan is an incredible professional when it comes to the needs of sellers that need to sell their homes off market. As a real estate agent I always recommend Casey to anyone looking to work with an off market buyer. He is honest, trustworthy & always looking for win-win solutions for everyone involved! The real estate market is better because of Casey & his company, We Buy Any House
jose moran
jose moran
22:43 19 May 22
Chandler Gentry
Chandler Gentry
21:56 19 May 22
This team is so amazing! Makes everything so easy and super reliable!
Amanda Jones
Amanda Jones
21:30 19 May 22
Alex Moses
Alex Moses
20:09 19 May 22
Best company to work with in the real estate game. ABSOLUTELY BEST CUSTOMER SERVICE IVE EXPERIENCED!!
Kyle Mellies
Kyle Mellies
20:06 19 May 22
Donald Gibson
Donald Gibson
19:41 19 May 22
Great communication and pleasant to work with! Everything went smoothly!
Josh Wathen
Josh Wathen
19:40 19 May 22
The team at We Buy Any Vegas House are extremely thorough and very kind. They go above and beyond to help you through the process. I would highly recommend.
Devin Flynn
Devin Flynn
19:34 19 May 22
Jamie was an absolute rockstar for us! She went above and beyond all our expectations, do not hesitate to go with them!
Blake Friedman
Blake Friedman
18:26 19 May 22
Casey Ryan and his team from We Buy Any Vegas House are the best in the game! Highly recommend!
Andrew Brannick
Andrew Brannick
18:12 19 May 22
Worked with Ryan on the sale of my Vegas property, I thought it was going to be a little difficult being out of town in Arizona. Ryan walked me through the process of selling and was able to get me an offer that was higher than I was expecting. He handled everything for me and made the process easy and really quick which was what exactly what I was looking for! Would 100% recommend for anyone looking to sell their house
Jared Vidales
Jared Vidales
17:50 19 May 22
Great service, great pricing. Sold my mothers house to them, and they handled it with care.
Kathy Hallett
Kathy Hallett
17:49 19 May 22
Jamie immediately helped me feel comfortable and the whole process was quick and hassle free! 5 stars
Melani Kirk
Melani Kirk
17:33 19 May 22
Jake Groves
Jake Groves
16:29 19 May 22
Local to Vegas and they are the best. I spoke to every cash home buyer in Vegas. Most of them just low-balled me over the phone. Ryan met me at the property and made an offer, which turned out to be the highest. He also agreed to close with the difficult hoarding tenant still there. Jamie supported me through the escrow process, she was very responsive to any questions I had and kept me informed during the closing. Less than a 30-day escrow. I spoke to a few of the team members over two months as I was getting other offers and all of them were easy to talk to and patient. They have a great team and make sure you include them in your decision-making.Thanks againJG
Joe Skaggs
Joe Skaggs
16:14 02 May 22
S Holt
S Holt
19:49 27 Apr 22
The first person I met was Allen. He immediately made me feel comfortable and confident in dealing with this company. I'm chronically ill. Allen is the only real estate person I'd let in my home.Throughout the process I ended up dealing with the whole team. Jamie deserves a medal for the hurdles she can overcome. Ryan is great at fixing problems and handling the big stuff, with a whole lot of support from Jamie. Allen was always available for me and checking in. He is great at answering questions in a way you understand and I always felt comfortable talking to him.Here is the actual email I sent the team today: "Hi everybody. Just wanted to thank you all again. I'm already able to do so much more for myself, I feel like a new person. I love my cute little house. I love the cold. It even snowed my 3rd day here. Because I'm able to move around, go outside, see people, clean the house, run errands, etc I'm starting to walk much better and even breathe better. And I haven't even seen a doctor yet. I don't feel like I'm a prisoner in my house anymore. Just wanted to let you know how much of a difference you make."My sale hit a few snags. But I'm the end, everything worked out just as they promised, for the amount they promised. These are great people to trust. (PS… Don't worry if they use O.D. I thought it was a scam of some kind. It wasn't. I just didn't understand).
Anabel Alvarez
Anabel Alvarez
17:05 12 Oct 21
Thank you WBAVH! Charles and Ryan were professional, personable, and patient with our needs and requests. The process was a breeze and they answered all of our questions in detail. They made us feel comfortable and part of their family. Will be recommending to everyone I know!
Steven Kaplan
Steven Kaplan
07:40 18 Aug 21
jerry gallegos
jerry gallegos
16:18 09 Aug 21
Very nice and helpful, responded to any questions very quick. I will do business with them again when I buy my next house.
Christopher Kampshoff
Christopher Kampshoff
00:30 07 Aug 21
Thank you so much guys, my brother was in a tight spot I appreciate you coming through. He's in a much better situation now. Again thank you.
Kelly Brown
Kelly Brown
18:48 27 Jul 21
I attempted to work with Allen, from this company. He seemed very nice and I was curious about what their company would give me for my home, if there were no realtors commissions involved. He said he needed to see the house. He came over and took a bunch of pictures and said he would talk to his partner Ryan, (the numbers guy), and get back with me in a half an hour. I didn’t hear from him that day. The next day I received a text from him, saying he would contact me on Monday. On Monday, he texted to see if I could talk at 12:00? I said, yes, he never called. Tuesday I receive a call from a random realtor telling me that Allen’s company has referred me to him. I call Allen, of course, to ask him what the heck is going on and he says yes, I work with this realtor, but I didn’t give him your information, he pouched it from our website!! I then say, so are you going to work with me and I find out, exactly what I already knew, they couldn’t offer enough money for my house, so they are not going to make an offer, HUGE SURPRISE!! #1, if you want your personal information safe, do not work with this company and #2, if you want a good offer on your home, don’t work with this company. I bought my home 3 years ago, it’s in great condition, in a great zip code and the market is through the roof!! If you can’t buy a house and get close to what someone needs financially right now, I don’t know when you can! Pick another company besides this one!! There are many!! Stay far away from this particular WE BUY HOUSES FOR CASH!!! You have been warned!!!
Carolyn Gobel
Carolyn Gobel
18:16 22 Jul 21
This company helped keep us from foreclosure. Thank you!
Carlos Caballero
Carlos Caballero
19:15 23 Jun 21
Thank you guys for your help with my Grandmas home. It was in rough shape and she left so much stuff. We couldn’t have taken on cleaning it out and the project.
jesse phalin
jesse phalin
01:29 18 May 21
Thank you, Thank you, Thank you! Went above and beyond assisting me through this process. Helped me move my things and even let me leave what I wasn’t taking with me. Thanks for all of the hard work.
Kelly Stewart
Kelly Stewart
21:27 08 May 21
My husband handled the process but felt good dealing with this local company and they did not try to change price after seeing the house. They actually offered higher once they saw our home. Had 5 companies come our to give us bids and they all were bait and switch. They beat everyone’s offers too. We tried to list before and couldn’t sell. I don’t know why anyone would work with head aches of real estate agents and paying commissions, banks, inspectors and the time to close only to walk away with the same money. Thank you Ryan and Jamie.
degan Stewart
degan Stewart
21:23 08 May 21
Thank you guys so much. Jamie is so sweet and on it. Ryan Is one of the most genuine people I’ve met in Vegas. They did what they said they’d do when they said they would and kept us in the loop the whole time
Brian Higgins
Brian Higgins
22:00 04 May 21
Thank you guys so much for everything. Ryan and Jamie Helped me find a place to get out of our old place. It was so nice to have the moving company just handle everything for me.
Sheila Winn
Sheila Winn
19:05 09 Apr 21
I struggled with the idea of selling my house to a "flipper". This company was fair, professional and extremely helpful every step of the way. I never had to wait for a response from Kelly Schnippel when I had a question or concern.I personally would recommend them to anyone looking to get a fair price for their property all the while getting kindness, professionalism and assistance from the buyer.Thank you Kelly Schnippel! I appreciate YOU and your team!Sheila Winn
Valerie Grijalva
Valerie Grijalva
17:30 27 Feb 21
Casey and his team will handle your transaction with the upmost professionalism and class like no other. Their knowledge in real estate will exceed your expectations and you won't be disappointed from beginning to end with their communication and systems to ensure your goals are met. I highly recommend Casey and his team!
Ann Reback
Ann Reback
18:51 25 Feb 21
Thank you for your professional and personal help in this process. You and your team have been so knowledgeable, responsive, courteous and kind...understanding my goals and executing each step in a timely and professional manner! THANK YOU! I will recommend you and your team to friends and others in our community.
Aviv Ben Shimon
Aviv Ben Shimon
16:38 25 Feb 21
Jess Lapensee
Jess Lapensee
16:31 25 Feb 21
From start to finish the selling process was quick and easy!
Lynne M
Lynne M
04:52 24 Jun 20
I have nothing but positive things to say about this company! I needed to sell a house quickly after a death in my family. I spoke with several Cash for Houses Companies in Las Vegas and settled on We Buy Any Vegas House. Everyone was very sensitive about my situation, helpful, answered all my questions and extremely responsive when I called. Ryan and Kelly were awesome!After we settled on a price everything went super smoothly in escrow and again if I had any concerns or questions there was immediate feedback. Also the fact that I was able to do this remotely as I live in California was extremely helpful! I am so grateful for all the help I received during a very challenging time in my life.
Freddy Aleman
Freddy Aleman
18:47 27 Dec 19
My wife and I recently bought a home from Casey Ryan. The home we purchased is located in Centennial Hills. Gorgeous remodel. Casey and his team did a great job of designing the home. We ran into a couple of issues shortly after moving in. Casey had his people out quickly during Christmas week to make a couple of repairs. He gave my wife and I peace of mind during a chaotic holiday week and for that we will always appreciate him. I would recommend a Casey Ryan home to my friends and relatives.
Angela Rienstra
Angela Rienstra
21:06 26 Dec 19
I needed to sell my house from out of state ASAP. I looked into some other larger name companies and was disappointed with their turn-around time and lack of customer service. I'm so grateful to have found Ryan (and Kelly)! They understood my time crunch and moved heaven and earth to buy my house at a fair price and closed by the promised date. They were with me every step of the way and offered world class service! 100% would recommend to anyone!
Sue Kuckelmann
Sue Kuckelmann
17:02 16 Nov 19
We couldn’t be more pleased with the service provided. From start to finish the team was professional and extremely helpful. All the deadlines were met or exceeded even when I was in Arizona and my husband was in Las Vegas. I would recommend them to anyone who is looking to sell in Las Vegas.
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