Reverse Mortgage

As many individuals seek to remain in their homes as they grow older, finding ways to pay for services such as in-home care or home modifications in order to improve accessibility and safety for seniors can prove to be expensive, even for individuals with savings. For some individuals who wish to stay in their home as long as possible, a reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM) may be one potential option for seniors looking to find a way to supplement their income.

A reverse mortgage Tulsa is a loan that allows homeowners to borrow money using their home equity and their home value as security for the loan. Individuals will receive either a lump-sum one-time payment, or monthly payments to pay for their expenses. It is important to note that reverse mortgages are not free; they are a loan that is repaid when the individual who has taken the loan no longer lives in the house, either by the individual, the individual’s heirs, or through the value of the home itself.

 

Requirements to qualify for Home Equity Conversion Mortgage (HECM)

  • Be at least 62 years of age or older.
  • Must be a homeowner.
  • The home must be used as a primary residence.
  • Home must meet minimum Equity Requirements.

 

Requirements after closing your Home Equity Conversion Mortgage (HECM)

  • The home must be the primary residence.
  • Property expenses must be paid.
  • Home must remain in a safe, livable condition.

Home equity conversion mortgages have several immediate benefits that can make them a very appealing option for individuals looking to age-in-place, renovate their homes, supplement their income, or acquire the financial support for in-home care.

 

No Monthly Mortgage Payments

Monthly payments stemming from a traditional mortgage can be eliminated with a reverse mortgage Tulsa, as the value and equity of the home can be used instead to provide the individual with money. Traditional mortgage payments are often the most pressing financial responsibilities that an individual must account for while aging in place, and a reverse mortgage can solve that issue entirely.

 

Retained Ownership

HECMs do not take ownership of an individual’s home. An individual is free to do with their home what they see fit, so long as they keep the home in a safe, livable condition. 

 

Reduced Debts

With the removal of monthly payments, individuals will have more financial resources to take advantage of. This allows individuals to put those finances previously used for financial payments towards other payments, such as credit cards, car loans, or insurance payments.  

 

Supplemental income

For individuals who have equity in their home, monthly payments can be set up in order to supplement their income. These fixed monthly payments can significantly impact the quality of life, giving individuals more finances if they do not have enough income from retirement, social security, or pension plans.

 

Non-taxable

The money acquired from an HECM is non-taxable, either from the lump-sum payment, monthly payments, or even from the line of credit. This allows individuals to use the full value of their equity without worry or concern about potentially devaluing it from the cost of taxes.

 

Government Insured

The HECM reverse mortgage Tulsa is a non-recourse loan, protecting the homeowner and their family from potential struggles related to the economy. The bank will not attempt to make an individual pay back this loan any time before the home is unoccupied or the requirements to maintain the HECM are not met.

 

Financial Flexibility

An individual can opt to start paying back the loan from a HECM at any time that they wish. It is not necessary to pay anything back until the home is unoccupied, but that option is there for those who may want to lower the loan amount or increase the line of credit that is available to the individual. 

 

Line of credit

With a HECM, an individual with enough equity in their home can set up a line of credit that will allow for individuals to take out a portion of finances based on their equity from their loan for various purposes, ranging from vacations to financial emergencies, or immediately necessary repairs. It is incredibly beneficial to have a potential back up in case of emergencies or unexpected circumstances.

 

Growth line of credit

The finances that are stored in an individual’s line of credit set up by the HECM retains the same interest rate as the mortgage rate of the property. An individual can expect to see more financial growth over a year on average from the interest accruing in an HECM line of credit compared to that of most banks.

 

Protection from housing market fluctuations

HECM reverse mortgages are resistant to the changing housing market as mortgage payments are not paid by the individual.

 

Protection from Balance exceeding the value of the home

Reverse mortgages grow over time, it is possible for the loan to exceed the value of the home, however, as a non-recourse loan, the amount that must be repaid can never exceed the value of the property. This serves to protect the homeowner and their heirs from claims against other assets.

 

Heirs’ Options

When an individual passes away, the former owner’s heirs become the new owners of the home and they have the choice to refinance the home by paying off the loan to keep the home. Alternatively, they can sell the home to pay off the loan, while retaining any remaining equity on the home.