A Leader in Reverse Mortgage Education

The Retirement Strategies Division at Finance of America Reverse (FAR) is the official provider of reverse mortgage education to the Financial Planning Association (FPA). We give you all the tools needed to help clients strategically leverage housing wealth as part of a comprehensive retirement plan.

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What's a Reverse Mortgage?

A reverse mortgage helps homeowners nearing or in retirement gain liquidity and improve their financial roadmap by unlocking stored equity from one of their largest sources of wealth ⁠– their home.
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Cover long-term medical expenses
Purchase the right house for later life needs
Fund legacy and estate plans
Diversify investments
Pay for home renovations
Pay for lifestyle improvements
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REVERSE IN ACTION

Improve Cash Flow

Joyce and Jim refinanced their existing mortgage with a new reverse mortgage and eliminated their current mortgage payment.

 

Age: 71 and 72

Home Value: $2,800,000

Potential Loan Amount: $1,528,000

Paid Off Mortgage Balance: ($1,100,000)

Remaining Cash Available: $414,800

Current Monthly Mortgage Payment: $6,808

Monthly Cash Flow Improvement: $6,608
* Illustration is for financial professional educational purposes only and assumes a borrower aged 71 who resides in CA and an fixed interest rate of 4.9% and financed fees of approximately 0.5% of the home value. Rate quote generated on 8/1/2021. Rates are rounded down to the nearest 0.125% and are subject to change.

Purchasing a Second Home

Linda and Steve live in Oregon and have $250,000 remaining on their mortgage. They would like to purchase a second home in Texas to be closer to family without selling their current one. They have $3,000,000 in investment accounts but would rather avoid selling and paying capital gains.

 

Age: 64 and 65

Home Value: $1,200,000

Potential Loan Amount: $592,000

Paid Off Mortgage Balance: ($250,000)

Remaining Cash Available: $336,800
* Illustration is for financial professional educational purposes only and assumes a borrower aged 64 who resides in OR and an fixed interest rate of 4.9% and financed fees of approximately 0.5% of the home value. Rate quote generated on 8/1/2021. Rates are rounded down to the nearest 0.125% and are subject to change.

Long Term Care

Emily does not have a long-term care solution and is looking to purchase life insurance with an LTC rider, but the premium is $9,000/year. As an alternative, Emily decides to put a reverse mortgage line of credit on her home to self-fund her needs and avoid a high insurance premium.

 

Age: 62

Home Value: $450,000

Paid Off Mortgage Balance: $0

Potential Line of Credit: $220,300
* Illustration is for financial professional educational purposes only and assumes a borrower aged 62 who resides in TN and an adjustable initial interest rate of 1.82% (+0.50% MIP) and financed fees of approximately 3.4% of the home value. Rate quote generated on 8/1/2021. Rates are rounded down to the nearest 0.125% and are subject to change.
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Frequently Asked Questions
Below are some frequently asked questions to help clients better understand the option of a reverse mortgage:
Does the borrower still own their home?

Yes. The borrower still retains ownership of the home and may sell it at any time with no prepayment penalties. The home is simply secured with a lien similar to a traditional mortgage or home equity line of credit.

Are there any required payments?

There is never a required principal or interest payment during the life of a reverse mortgage loan. Homeowners are still required to pay property-related expenses, including taxes, insurance, and HOA fees.

When is the loan due?

Generally, the loan balance is due after the last borrower permanently moves from the home or passes away.

What happens when the borrower passes away?

The borrower’s heirs may sell the home and keep any remaining equity if they wish, or refinance with a traditional mortgage if they want to retain the property. In the event the loan exceeds the value of the property, the heirs can choose to walk away via foreclosure with no responsibility to the remaining balance.

Are reverse mortgages non-recourse?

Yes, reverse mortgages are non-recourse loans, which means the lender can only look to the subject property for satisfaction of the mortgage lien. The borrower and/or heirs are never personally liable for satisfaction of the reverse mortgage.