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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.
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
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)
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
Discover all the ways home equity can be a strategic piece in solving the retirement puzzle.
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.
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.
Generally, the loan balance is due after the last borrower permanently moves from the home or 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.
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.
FAR’s proprietary products can offer borrowers loan amounts up to $4 million.
Yes. The home can be in a trust, revocable or irrevocable, provided the trust meets FHA trust guidelines.
This amount is generally based on the home’s value, prevailing interest rates, and the age of the youngest borrower or eligible non-borrowing spouse.
Reverse mortgages are only available on the borrower’s primary residence, which can be a single-family home or up to a four-unit dwelling.
However, there are no restrictions on the use of reverse mortgage proceeds. As long as borrowers continue to meet the occupancy requirements of the loan, they may use their proceeds as part of a secondary property purchase.
The borrower is responsible for all property-related expenses, including taxes, insurance, and HOA fees.
No. All reverse mortgage proceeds are considered loan proceeds and not subject to income tax.
Borrowers must be at least 62 for an FHA-insured reverse mortgage and 60 (where applicable by state law) for a lender-specific product, including FAR’s proprietary solutions. Younger spouses can remain on the property title but cannot be on the loan.
The terms of the loan remain the same as long as one borrower remains in the home.