Reverse Mortgage Explained

What Is a Reverse Mortgage?

A reverse mortgage allows homeowners to convert the equity in your home into cash or a line of credit. These funds can be used for anything that you see fit but was designed to be used for maintenance of the home.

Who Is Eligible?

  •  Homeowners above the age of 62 who want money to use in their discretion
  •  Primary residences only
  •  Must be financially able to maintain your home, including insurance and taxes
  •  Must meet with a HUD counselor
  •  The home can be paid off or only have minimal amount left on a previous loan

Check out our Reverse Mortgage Calculator to see what an estimate would look like for you.

How Do the Payments Work?

There are no payments that you, as the homeowner, are required to make. With a regular mortgage, the borrowers make payments to the lender each month to gain equity in the home. With a reverse mortgage, the lender will pay as they receive the equity over time.

These payments are considered tax-free* as they are not considered income. In addition, these funds do not affect regular Social Security or Medicare benefits**.

Paying Back the Reverse Mortgage

The loan is paid back when the last borrower has died, sold the home, or no longer lives in the home as their primary residence. Once death occurs, the heirs are responsible for the full loan balance or 95% of the appraised home values, whichever is the lower amount.

It could be required to be repaid sooner within some circumstances such as the home is not maintained, or the taxes or insurance are not paid.

There are several ways that one can repay the reverse mortgage.

One option is to sell the home to receive funds to covers the loan amount and transaction costs. This would clear the borrowers and heirs of the responsibilities of the reverse mortgage. Another option is to refinance the mortgage. This will turn the reverse mortgage into a traditional mortgage with payments. You could also pay the balance off and keep the property as your own.

How To Get One?

Contact JTS & Co. Mortgage Professionals to set up a consultation to decide if a reverse mortgage is the right choice for you. There are plenty of options when it comes to mortgages, and we are here to help provide valuable information. Call us today at 662-329-9090 or stop in our office to talk to one of our licensed mortgage professionals.

*Consult a tax advisor for your personal tax situation.
** Contact your Medicare and Social Security Advisor for more details on your personal situation.

JTS & Co. Mortgage Professionals NMLS #55275