Reverse mortgages - First Choice Lending of New Jersey, Inc.

Reverse Mortgages

Reverse mortgages (also called home equity conversion loans) enable elderly homeowners to tap into their equity without selling their home. The lender pays you money based on the equity you've accrued in your home; you receive a lump sum, a monthly payment or a line of credit. Repayment is not necessary until the borrower sells the property, moves into a retirement community or passes away. When you sell your home or no longer use it as your primary residence, you or your estate must repay the cash you received from the reverse mortgage plus interest and other finance charges to the lender.

Reverse mortgages require you be at least 62 years of age, have a low or zero balance owed against your home and maintain the property as your principal residence.

Reverse mortgages are ideal for homeowners who are retired or no longer working and need to supplement their income. Interest rates can be fixed or adjustable and the money is nontaxable and does not interfere with Social Security or Medicare benefits. Your lender cannot take property away if you outlive your loan nor can you be forced to sell your home to pay off your loan even if the loan balance grows to exceed property value.

For more information, call

Robert Curtiss at (215) 260-7140

Top 8 Myths

1. I would be selling my house to the bank

FALSE You keep the title to your house. The lender will add a lien on the property but you will still have complete control over it.

2. My heirs won't inherit anything

FALSE Your estate only owes the balance on the reverse mortgage. The balance is however much you've spent and interest. Let's say you got a reverse mortgage and owed $50,000 after 5 years. Then you decided to sell the house for $250,000. The lender gets $50,000 and you get $200,000.

3. I might "outlive" the loan

FALSE FHA/HUD reverse mortgages are designed specifically so that you can't outlive the loan. When you get the reverse mortgage, the lender will charge you 2% to purchase mandatory FHA mortgage insurance. That insurance guarantees that even if you live to be 100, you can never owe more than the value of your home and you can never be forced to leave.

4. I could get forced out of my home

FALSE FHA/HUD reverse mortgages specifically state that you can not be forced out of your home.

5. Social Security and Medicare will be affected

FALSE Money from a reverse mortgage is not considered income because it is a loan. For this reason, a reverse mortgage does not lower Social Security and Medicare benefits.

6. I would have to pay taxes on the reverse mortgage

FALSE You already paid taxes on the money when you were putting the equity into your home. When you take it out again, it is not taxable.

7. There are big out-of-pocket expenses

FALSE All of the costs, whether closing costs or interest, are financed. That means there are never out-of-pocket expenses at any point in the reverse mortgage.

8. A reverse mortgage is similar to a home equity loan

FALSE First, home equity loans may have many requirements such as high income, low debt, and good credit that a reverse mortgage does not. Second, you can "outlive" a home equity loan and end up being foreclosed on by the bank. This can never happen with a reverse mortgage. Third, a reverse mortgage usually has significantly lower interest rates.

For more information, go to

www.libertyreverseadvisor.com/robertcurtiss

call Robert Curtiss at (215) 260-7140