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Reverse Mortgages

A reverse mortgage loan is a unique loan that allows homeowners, 62 years of age and older, to draw on the value of their home, which is paid to the homeowner(s) in a variety of payout options or used as a line of credit. One of the unique features of a reverse mortgage loan is that it does not require repayment until the homeowner(s) no longer reside in the residence, the last surviving borrower passes away, or does not comply with the loan obligations. An example of reverse mortgages or HECM guidelines / obligations are paying property taxes and insurance and maintaining the property to FHA guidelines.

Filling out reverse mortgage form
Happy senior couple in front of their home

Use a Reverse Mortgage to
Enjoy your Retirement Years

Turn your property into a valuable resource for financial freedom so you can make the most of your retirement years. With no required monthly payments and tax-free income, you can have peace of mind utilizing your home’s value while retaining ownership and enjoying a secure financial future.

Stay in Your Home and Get Rid of Monthly
Mortgage Payments

We aim to streamline the application process, enabling you to obtain the keys to your new home quickly.

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Larry Melton

Video Title

Larry Melton

Video Title

Larry Melton

Video Title

Larry Melton

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Meet VP Reverse Mortgages, Larry Melton

Larry Melton

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What is a Reverse Mortgage and how can I use it?

Larry Melton

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Can I get a Reverse Mortgage if I already have a regular mortgage?

Larry Melton

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How can a Reverse Mortgage improve my cash flow?

Larry Melton

Reverse Mortgages enable homeowners, aged 62 and over, to borrow against the equity in their homes without having to sell the home, give up the title, or assume a new monthly mortgage payment. These are only available on primary residences where borrowers retain ownership and title to their homes.

Proceeds from a reverse mortgage are tax-free and can be used for any purpose, such as paying off debt, covering living expenses, delta “or” funding home improvements. The name “reverse mortgage” is appropriate because the payment flow is reversed: instead of you making monthly payments to a lender (like a regular mortgage), the lender makes payments to you.

Meet Your ​Reverse Mortgage Specialists

Reverse Mortgage Calculations Made Easy

Reverse Mortgages were created for those who want a secure way to supplement their retirement income without having to sell their home, give up its title, or assume a new monthly mortgage payment. To get a quick estimate and idea of how much you may qualify for, try our easy-to-use reverse mortgage retirement calculator. Contact your Reverse Mortgage Specialist for more detailed guidance about the products and options available to you.

Reverse Mortgage
Myths vs. Facts

Older couple reviewing house plans

Debunking Common
Reverse Mortgage Misconceptions

Navigating the reverse mortgage landscape can be confusing, especially with many myths clouding the facts. At Directors Mortgage, we aim to clarify common misconceptions and provide accurate information to empower you with the knowledge you need for a successful homeownership journey.

Debunking Common
Reverse Mortgage Misconceptions

Let’s explore some of the common myths about reverse mortgages and the truth about them.

Myth

The bank takes ownership of the home.

Fact

When you take out a reverse mortgage, you retain full ownership of your home. You are still responsible for paying property taxes, homeowner’s insurance, and maintenance costs. Just like any other mortgage, a lien is placed on the property as security for the payment of your loan.

Myth

There won’t be any home equity left for your children.

Fact

Whether or not your children will inherit any home equity after you take out a reverse mortgage depends on a number of factors, including how much money you borrow, the length of your loan, and how much the home value changes over time.

Myth

When you pass away, your children will be responsible for repaying the loan.

Fact

Reverse mortgages are a type of non-recourse loan, which means that lenders can only be repaid from the home’s sale proceeds up to its value. The repayment of a reverse mortgage is typically tied to the home’s value and the loan balance, not the financial responsibility of the homeowner’s children unless they want to refinance the loan to purchase it for themselves.

Myth

You are required to make monthly mortgage payments.

Fact

You are not required to pay any mortgage payments on a reverse mortgage as long as you live in the home as your primary residence and continue to pay your property taxes and homeowners insurance.

Myth

You can’t qualify for a reverse mortgage if you have an existing mortgage on your home.

Fact

Though you must address any outstanding obligations tied to your home’s title when applying for a reverse mortgage, having a completely debt-free home is not required.

Myth

You cannot sell your home while you have a reverse mortgage.

Fact

You can sell your home at any time. The reverse mortgage loan at closing. You can also pay off your loan early without any prepayment penalties.

Additional Facts about
Reverse Mortgage Loans:

This type of mortgage provides homeowners who are 62 years or older with access to a portion of the value of their home. It is important to note that a reverse mortgage is a specialized loan that is only available for the borrower’s primary or principal residence.

FHA-insured reverse mortgages (Home Equity Conversion Mortgages) are insured by the Federal Housing Administration, protecting borrowers, lenders, and beneficiaries. HUD counseling (from an independent HUD-approved counselor) is required before borrowers incur any loan costs.

The cash or proceeds from a reverse mortgage are typically not taxable as individual income. However, it is recommended that borrowers consult with a tax advisor regarding their specific situation.
It’s important to understand that a reverse mortgage is not a form of government assistance but rather a loan that requires repayment at a later date. It is typically paid back when the borrower dies, sells the home, fails to comply with the terms, or no longer lives in the home as their primary residence.
The proceeds from a reverse mortgage could affect government needs-based programs like Medicaid and Medi-Cal. It is important to consult with a professional before taking out a loan. It’s also important to comply with the loan terms, as failure to do so could result in foreclosure.

Who is eligible for a Reverse Mortgage?

To qualify for a reverse mortgage, you must:

Be at least 62 years old
Occupy the home as your primary residence

Your credit score and financial assessment may also be considered.

What types of reverse mortgages are available?

Home Equity Conversion Mortgages (HECMs)
Proprietary Reverse Mortgages
Single-purpose Reverse Mortgages

Home Equity Conversion Mortgage (HECM) are the most common and are insured by the Federal Housing Administration (FHA).

To qualify for a reverse mortgage, you must:

  • Be at least 62 years old
  • Occupy the home as your primary residence

Your credit score and financial assessment may also be considered. 

  • Home Equity Conversion Mortgages (HECMs)
  • proprietary reverse mortgages, and 
  • single-purpose reverse mortgages. 

Home Equity Conversion Mortgage (HECMs) are the most common and are insured by the Federal Housing Administration (FHA).

It is repaid when the homeowner moves out of the home, sells the home, or passes away. At that point, the loan balance, including accrued interest and fees, must be repaid. The home is usually sold to cover this debt, and any remaining equity goes to the homeowner’s estate or heirs.

You cannot lose your home to the lender as long as you continue to live in it as your primary residence, maintain the property, and pay property taxes and insurance. However, failing to meet these requirements could result in foreclosure.

The amount of money you can borrow with a reverse mortgage depends on your age, the value of your home, and the current interest rates. In general, the older you are and the more valuable your home is, the more money you can borrow.

No, the funds you receive from a reverse mortgage are typically not considered taxable income. It is considered a loan advance rather than income, so it is not subject to federal income taxes. However, it’s crucial to consult with a tax advisor or financial professional to understand how a reverse mortgage might affect your specific tax situation, especially if you receive other government benefits that could be impacted.

Yes, there are counseling requirements before obtaining a reverse mortgage. Borrowers are required to undergo independent counseling from a HUD-approved reverse mortgage counselor.

There are a number of fees associated with reverse mortgages, including origination and servicing fees. Consult with a Reverse Mortgage Specialist for more information. 

 

***Consult your tax advisor or financial advisor for tax advice. These materials are not from HUD or FHA and were not approved by HUD, FHA or a government agency. At the conclusion of the term of the reverse mortgage loan contract, some or all of the equity in the property that is the subject of the reverse mortgage no longer belongs to the person and the person may need to sell or transfer the property to repay the proceeds of the reverse mortgage from the proceeds of the sale or transfer or the person must otherwise repay the reverse mortgage with interest from the person’s other assets. Lender will charge applicable fees which may include, but are not limited to, an origination fee, a mortgage insurance premium, closing costs and servicing fees for the reverse mortgage, all or any of which the lender will add to the balance of the reverse mortgage loan. The balance of the reverse mortgage loan grows over time and the lender charges interest on the outstanding loan balance. The person retains the title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurance, maintenance and related taxes. Failing to pay these amounts may cause the reverse mortgage loan to become due immediately. Interest on a reverse mortgage is not deductible from the person’s income tax return until the person repays all or part of the reverse mortgage loan.