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Reverse Mortgages

A reverse mortgage is a home loan — used for any purpose — allowing seniors age 62 and above to access the cash equity they have built up in their home. Team Mortgage Company’s residential reverse mortgage specialists can help you understand how these loans can benefit you and your family.

There are several different reverse mortgage loan programs. Fannie Mae Home Keeper®, Jumbo Cash-Out Loan, and the HUD-insured Home Equity Conversion Mortgage (HECM) are three of the most common. As demand increases, more reverse mortgage loan programs from different organizations will become available.

This type of loan is referred to as a reverse mortgage because you borrow money from a lender, but the lender makes monthly payments to you, rather than you making monthly payments to the lender. In addition, all interest is paid at the end of the loan, rather than in the beginning.

Reverse Mortgages offer the following benefits:

  • Strengthen your personal and financial independence
  • Help pay for medical and preventative health care costs or other needs
  • You won’t lose your home in foreclosure if you pay your property taxes and insurance
  • Loan is paid off when the home is sold by you or your heirs, or if all borrowers move out
  • You can still keep your Medicare or Social Security benefits
  • Loan can be used as a credit line that you can draw upon when needed
  • You will be able to receive all of your cash right away
  • Get the best of both— Receive cash now and have a balance in reserve to use as credit
  • No Income Needed: Homeowner does not need to work and is not qualified based on income

As the homeowner receives monthly cash income, the loan balance increases. In the following twelve-month example, the homeowner begins with a debt-free home. As the homeowner receives cash, the mortgage grows. By the end of month twelve, the homeowner owes the bank $6,000 plus $232.44 interest. All Reverse Mortgage loans have a variable rate.

Assumptions*

Regular monthly advances $500
Annual interest rate 7.0 %
Monthly interest rate .583% (.07 / 12)

 

Month Beginning Balance Interest Ending Balance Cash Disbursement
0 0 0.00 0.00 $500.00
1 $500.00 $2.92 $502.92 $500.00
2 $1,002.92 $5.85 $1,008.77 $500.00
3 $1,508.77 $8.80 $1,517.57 $500.00
4 $2,017.57 $11.77 $2,029.34 $500.00
5 $2,529.34 $14.75 $2,544.09 $500.00
6 $3,044.09 $17.76 $3,061.85 $500.00
7 $3,561.85 $20.78 $3,582.63 $500.00
8 $4,082.63 $23.82 $4,106.44 $500.00
9 $4,606.44 $26.87 $4,633.31 $500.00
10 $5,133.31 $29.94 $5,163.26 $500.00
11 $5,663.26 $33.04 $5,696.29 $500.00
12 $6,196.29 $36.15 $6,232.44 $500.00

*Many criteria are considered when determining the reverse mortgage loan amount, interest rate, etc.

 

For more information about reverse mortgage loans and to see if you qualify to take advantage of these popular programscontact Team Mortgage Company today or call us at 616.974.9710.