EDITORS NOTE: This post is a re-print of an article that I wrote a couple years ago. With the holidays upon us, I couldn’t resist the opportunity to share this again and also remind my readers that we do offer reverse mortgages at Mortgage Master Service Corporation.
If Santa and the Mrs. would like to add a steady tax-free income each month while he’s volunteering, making toys and traveling around the world, he may want to consider how a Reverse Mortgage could benefit their lives.
Reverse mortgages can be a financial tool for Seniors who would like to have access to additional funds. A reverse mortgage is essentially a loan against home equity for borrowers who are at least 62 years old.
Unlike a traditional mortgage where you make monthly payments, a reverse mortgage pays from your equity. Instead of paying down your balance every month, your loan is actually growing as it provides tax free income to the Senior. The mortgage is paid off when the last senior leaves the home. Here is a calculator to see how much cash you may qualify for utilizing a reverse mortgage.
Reverse mortgages are easy to qualify for as long as their is enough equity in the property:
- Youngest borrower must be 62 years of age or older.
- No income or credit score requirements.
- Counseling is required from a HUD approved agency (no cost to the borrower).
- Property must be the primary residence. (It does not need to be mortgage free).
In addition, reverse mortgages are non-recourse (the borrower can never owe more than the appraised value).
Santa and Mrs. Claus can use a reverse mortgage to:
- receive a lump sum of money (with no payments due until the last borrower leaves the home).
- receive a monthly tax free payment.
- purchase a primary residence.
The money can be used for anything they wish from bridging the financial gap between what they planned for retirement and the reality of retirement to vacationing or what’s on their Christmas list.