MARSHFIELD, WI (OnFocus) – Submitted – A reverse mortgage is a unique loan that allows homeowners, who are typically aged 62 or older, to convert a portion of their home equity into cash without selling their home, giving up ownership or having to take on required monthly mortgage payments. The borrower will have to abide by the loan terms, which include living in the home, maintaining it and paying property charges, like taxes and insurance.
With a reverse mortgage, the flow of money generally moves in reverse—the lender pays the borrower instead of the borrower making payments to the lender. The amount that can be borrowed through a reverse mortgage is based on the age of the youngest borrower (or non-borrowing spouse, if applicable), the value of the home and the interest rate on the loan. The borrower can receive the funds as a single-disbursement lump-sum payment, in a line of credit or in monthly installments.
As long as you meet all of the terms of the loan, the loan balance only becomes due when the home is not the primary residence of at least one surviving borrower (e.g., the last surviving borrower permanently moves out or passes away).
During a bear market, a reverse mortgage can play a vital role in helping you protect your nest egg and sustain spending.*
”Reverse mortgages can be a helpful financial product for seniors who want to supplement their income or take pressure off their nest egg, as they can provide the borrower access to home equity without selling their home,” said Josh Kilty, a loan officer from Fairway Independent Mortgage Corporation. “It’s important to carefully consider the terms and implications before taking out a reverse mortgage.”
Ways that a reverse mortgage can benefit the borrower during a bear market include:
Supplement Retirement Cash Flow: During a bear market, your investments may lose value and your retirement income may decrease. A reverse mortgage can help supplement your retirement cash flow and help cover living expenses.
Protect Investments: If you rely on your investments for retirement income, a reverse mortgage can help protect your investments during a bear market. Instead of selling investments at a low price to cover living expenses, you can use a reverse mortgage to access the equity in your home. By using your home equity as a buffer asset, you can possibly give your investments additional time to recover.*
Potentially Increase Available Funds: In a bear market, the value of your home may decrease. However, a reverse mortgage can help lock in your home value. With a Home Equity Conversion Mortgage (HECM), the most popular type of reverse mortgage in the U.S., you can opt to access your funds via a growing line of credit. The unused portion of the line grows over time at the same compounding rate as the loan balance, regardless of swings in the value of the home. In other words, you will have access to greater borrowing capacity over time. The HECM line of credit cannot be frozen, reduced or canceled due to market conditions.
No Monthly Mortgage Payments: With a reverse mortgage, you do not have to make monthly principal and interest mortgage payments. However, you must pay the property-related charges, like taxes and insurance.
The repayment flexibility a reverse mortgage offers can be especially beneficial during a bear market when your income may be lower. Instead of making monthly payments toward the loan balance, the interest on the loan is added to the balance.
Flexibility: A reverse mortgage can provide the flexibility to use the funds as you see fit. You can use the funds to cover living expenses, pay for healthcare costs or even to invest in the stock market when the market is low.*
“A reverse mortgage is a complex financial product and may not be suitable for everyone, so be sure to talk to a financial person you trust before undertaking,” Kilty said. “It’s important to do your research and carefully weigh your options. As a trusted lender, Fairway wants you to be fully aware of the potential advantages and disadvantages of reverse mortgages. If you are interested in learning more about reverse mortgage, Fairway can help.”
To learn more, contact:
Josh Kilty
Branch Sales Manager | NMLS# 277851
Phone: 715-384-7878
211 S. Central Avenue, Marshfield, WI 54449
www.fairwayjoshk.com
*This advertisement does not constitute financial advice. Please consult a financial advisor regarding your specific situation.
Copyright©2023 Fairway Independent Mortgage Corporation (“Fairway”) NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-866-912-4800. All rights reserved. Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency. Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. The youngest borrower must be at least 62 years old. Monthly reverse mortgage advances may affect eligibility for some other programs. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Opportunity.
Author: News Desk
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