More seniors tapping home equity lines of credit to manage investments, bridge income
I get a lot of questions about reverse mortgages, and most are steeped in misunderstanding, leading to fear and an unjust general negative connotation about the subject. Reverse mortgages are a fantastic tool to help pay bills, health care expenses, and provide additional retirement income. They’ve also become a helpful tool to secure investments in a down market, and many seniors are opting to use the funds to postpone drawing on social security benefits until they’re older and the benefits are worth more.
I’ll be addressing those topics in future posts in more detail, but for today, let’s answer some of those common questions I’ve been receiving about reverse mortgages:
Q: How much money can I get from my home equity line?
A: The loan amount available to homeowners depends on three factors: home value (currently capped at $625,000), the interest rate, and the age of the borrower. The minimum age to access a reverse mortgage line of credit is 62. The higher the home value and the older the homeowner, the bigger the potential loan amount. Low interest rates increase the amount available to borrow as well.
Q: Will my children be responsible for repaying what I borrow against my home when I die?
A: No. The sale of your home, to your children or an outside party, will satisfy the loan agreement. Should your home be worth more than what was owed on the reverse mortgage at the time of your death, your heirs will have the option to sell the home, pay off the reverse mortgage and keep the remaining equity. If there is no equity left in the home after your death, your executor needs only to turn over the deed to the home, and the contract for the reverse mortgage loan is satisfactorily filled.
Q: Is the bank going to take my home from me?
A: So long as property taxes and homeowners insurance are kept up to date, no, the bank is not going to take your home from you if you borrow against your home equity via a reverse mortgage.
Q: If I run out of money, do I have to leave my home?
A: No. No payments are due on the loan until borrower moves or dies. Keep in mind that property taxes and homeowners insurance must be paid.
Q: Are reverse mortgage loans taxed?
A: No. And it’s not often I get to say that!
What can a reverse mortgage loan do for you? A lot! Call Josh Campbell Mortgage today to discuss how tapping in to your biggest investment can secure your retirement and future.
Josh Campbell is one of Dallas-Fort Worth’s top-rated mortgage loan officers. Since 2004, Josh has helped thousands of first-time and existing homebuyers by obtaining the very best available mortgage solution for their needs. Josh resides in The Big D with his wife, Katherine, and their two children.
Josh Campbell Mortgage, NMLS#493535. Lending in all 50 states.