Taking the Mystery Out of Reverse Mortgages

Before we start taking the mystery out reverse mortgages lets define what a reverse mortgage is. A reverse mortgage is a loan that allows seniors to use a portion of the equity they've accumulated in their homes to improve their quality of life and knock down the financial barriers to independent living.

Some of the benefits of reverse mortgages are...

• No monthly mortgage payments
• No loan repayment until the member moves out permanently (sells home, passes away, etc.)
• Member will never have to leave their home.

Reverse Mortgage loan proceeds are Tax-Free* and can be paid to the member in several ways:

• Single lump-sum payment
• Fixed regular monthly income payments to the member
• As a line of credit allowing members to draw on available funds when & how necessary
• As a combination of ALL of the above programs (i.e. ½ lump sum; ¼ monthly income/annuity payments; ¼ line of credit)

The qualifications for a Reverse Mortgage are simple and straightforward.

• Applicant members must be at least 62 years of age
• Must be a homeowner (single family residence, condo, townhouse, manufactured housing built after June 1976)
• Home does NOT need to be owned "Free & Clear"
• No income or medical requirements to qualify
• No credit or credit score requirements to qualify

Frequently asked questions and their answers:

Q. Can the Lender take my home?
A. Homeowner retains ownership. The loan is secured by a deed of trust or a mortgage just like a regular mortgage, however the member's DO NOT MAKE PAYMENTS as long as they live in the property.

Q. Can I be thrown out of my house?
A. Homeowners can stay in the home until they move out of the home permanently (sale, death, etc...)

Q. Will my heirs will be against it?
A. Experience demonstrates heirs, once educated on the loan product, are in favor of Reverse Mortgages as it allows the family member to live in their property without a financial burden on their heirs.

Q. Can I owe more than my house is worth?
A. The loan will NEVER exceed the value of the home.

Q. Will my children lose their inheritance?
A. Historically, most houses continue to appreciate over time. A high percentage of houses still have enough equity to pass down as inheritance, allowing them to sell or refinance.

Q. Can the loan balance exceed my property value?
A. If for some reason the loan balance exceeds the value of the property the additional amount is "forgiven" and NOT responsible by the heirs.

Q. Can reverse mortgage loan proceeds/income affect my Medicare/social security income?
A. Loan proceeds DO NOT affect Social Security or Medicare benefits. It is your "tax-free" money to spend as you please. How ever please consult your tax advisor should you have any questions.

For more information on reverse mortgages or for information on any of our mortgage products please contact Glen Lazovick, Director of Mortgage Lending at (301) 944-1753 or via email at GlenL@mafcu.org. You can also view product information or apply online.