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Using Your Home to Produce Income
- A loan against your home that requires no repayment for as long as you live there.
- You remain owner of your home and are still responsible for payment of taxes, insurance, and maintenance.
- When the owner moves or passes, he(she) or the heirs must repay all of your cash advances plus interest.
- Access to extra income
- Receive monthly payments(or lump sum or credit line) instead of making payments
- Flexible qualifying guidelines
- No income, employment, or credit guidelines
- Payment disbursement options
- Lump-sum
- Monthly installments
- Line of credit
- No pre-payment penalties
- Repay at anytime without penalty
- Peace of mind
- Amount you owe will never exceed your property value
- Will never cause you to lose your home
- Homeownership
- You remain owner of your home
- Financing Fees
- Money from the loan can be used to pay the fees
- Loan Amounts
- Amount you can get varies by program
- Within a program, the amount depends on your age and the value of your home, and interest rates
- Debt Payoff
- Generally, Reverse Mortgages must be "first" mortgages
- Other debt must be paid off
- Debt Limit
- You can never owe more than the value of your home
- Repayment
- Must be repaid when the last owner dies, sells the home, or permanently moves
- Total Annual Loan Cost (TALC)
- Generally, the longer you live in your home the less expensive the loan will be
- Home Equity Conversion Mortgage (HECM)
- Only Reverse Mortgage insured by the Federal Government
- Provides the most flexibility in how cash is paid to you
- Can be less costly than alternatives
- Can be used for any purpose
- Home value subject to limits that vary by county (max. $312,895 in 2005)
- Deferred Payment Loans
- Offered by many state and local governments
- Must be used for repairing or improving your home
- Property Tax Deferral
- Offered by some state and local governments
- Can only be used to pay your property taxes
- Proprietary Reverse Mortgages
- Usually the most expensive
- Many provide larger cash advances than a HECM
- Jumbo loan programs for higher valued homes
- The Bank owns my home
False! Homer owner retains title and can sell the home at any time - Good income and credit are necessary to qualify
False! No income or credit qualifications. You must be 62 years old and the home must be your primary residence. - I could owe more than the value of my home
False! The federal government insures that you can never owe more than the value of your home and all remaining equity belongs to your heirs - Reverse mortgages are only for seniors with financial troubles
False! Reverse mortgages are used for many purposes - I must make monthly payments
False! No monthly payments are required. The only responsibilities of the homeowner are taxes, insurance, and general up-keep. - To qualify, my home must be "free and clear"
False! You may use the proceeds of your reverse mortgage to pay off an existing mortgage balance.
Homeowners considering a Reverse Mortgage should ask:
- Who else should I involve in considering this loan?
- Children, Heirs, and/or trusted friends
- Which counselor should I choose?
- To get a federally insured loan you must discuss it with a HUD-approved counselor
- AARP's Reverse Mortgage Education Project offers this counseling
- Have I given due consideration to all of my choices?
- If you plan to sell soon, consider a Home Equity Loan-not a reverse mortgage!
- When would be the best time to take out a Reverse Mortgage?
- You may be eligible for larger amounts as you age and your homes value increases
- What interest rate should I choose?
- Annual adjustment or
- Monthly adjustment
- Which lender should I choose?
- Ask who will service the loan after you close
- Costs
- Origination services
- Commitment to your needs
- How should I use this loan?
- Income supplementation
- LTC policy
- Grandkids College
- Estate Planning
- Loan advances paid to you;
- Loan costs paid to the lender and others; and
- Leftover equity, if any, paid to you or your heirs at the end of the loan
- How much would I get?
- How much would I pay?
- How much would be left at the end of the loan?
Call toll free: 1-866-259-5020
Arnold Financial Group(AFG) provides financial services to qualified clients. Any discussion of investments and investment strategies of funds (including current investment themes, research and investment processes, and portfolio characteristics) represent the views of AFG at the time of publication. Any expression of opinion is subject to change without notice and are not intended to be a guarantee of future events.
This document is supplied by AFG for information only and does not constitute a solicitation to buy or sell securities. Although information and opinions in this document have been obtained from sources believed to be reliable, we do not warrant the accuracy or completeness and accept no liability for any direct consequential losses arising from its use. The information is representative of AFG viewpoints at the time of publication. Not all products and services are available at all locations and not all instruments are suitable for all investors.
6351 South East St. • Suite A •Indianapolis, In 46227
Phone: (866)259-5020 • Fax: (317)705-0050 • Email: jack@arnoldfinancialgroup.com