• Skip to primary navigation
  • Skip to main content

The Hayes Law Firm

Estate and Elder Law Information Center

  • (626) 403-2292
  • Attend a Free Webinar
  • Home
  • Our Firm
    • About Our Firm
    • Virtual Estate Planning
    • About The American Academy
    • Advantages of Working With Our Firm
    • Attorney and Staff Profiles
    • Speaker Connection
    • Multi-Media
    • Reviews
    • College Internship Program (Marketing)
  • Estate Planning
    • Asset Protection & Business Planning
    • Estate and Gift Taxes: Figures
    • Family-Owned Businesses
    • Financial Planning Assistance
    • Incapacity Planning
    • IRA & Retirement Planning
    • Legacy Planning
    • LGBTQ+ Estate Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
  • Probate Process
    • CA Probate & Estate Planning Savings Calculator
    • California Probate Process
    • Common Probate Questions
    • Probate Resources
      • Bereavement Resources
      • How to Know if You Need Extra Help With Your Grieving
      • The Mourner’s Bill of Rights
      • Trust Administration & Probate Definitions
      • When a Loved One Passes Away With a Trust
      • When a Loved One Passes Away With a Will
    • Why Hire a Probate Attorney?
  • Trust Administration
    • Trust Administration Resources
    • Trust Administration Assistance
  • Resources
    • Feature Articles by The Hayes Law Firm
    • DocuBank
    • COVID-19 Estate Planning Resources
    • Educational Heroes
    • Elder Law Reports
    • Estate Planning Resources
      • Estate Planning Checkup
      • Estate Planning Definitions
      • Estate Planning Articles
      • Estate Planning Reports
      • Incapacity Planning Definitions
      • Is Your Estate Plan Outdated?
      • Top 10 Estate and Legacy Planning Techniques
    • Frequently Asked Questions
      • Estate Planning FAQ’s
      • FAQ’s for Families Without an Estate Plan
      • Legacy Wealth Planning FAQ’s
      • LGBTQ Estate Planning FAQ’s
      • Trust Administration & Probate FAQ’s
    • LGBTQ+ Resources
    • Newsletters
    • Special Needs Resources
  • Elder Law
    • Are You A Caregiver for a disabled loved one?
    • Coping With Alzheimer’s
    • Emergency Medi-Cal & Nursing Home Planning
    • Guardianship & Conservatorship
    • Hospice Care
    • Medi-Cal Planning
    • Veteran’s Benefits
  • Seminars and Webinars
  • Contact Us
    • Preparing for Your Initial Consultation
  • Blog

Reverse Mortgage: Right for You?

Courtesy of The Hayes Law Firm · Nov 13, 2021 ·

Reverse Mortgage: Right for You? – If you’re 62 years of age or older and want money to supplement your income, you might consider a reverse mortgage. You’ll be able to convert part of your home equity into cash without having to sell your home or keep paying your mortgage.

Reverse mortgage: Right for you?

In a reverse mortgage, a lender pays you what amounts to an advance payment on your home equity. The payment is usually tax-free. Generally, the homeowner doesn’t have to pay back the money for as long as he or she lives in the home — the homeowner keeps the title. Selling the home reaps money to repay the loan, and any money left over after the sale goes to the owner or his or her heirs.

The benefits:

  • You remain the owner of your home.
  • There are no monthly mortgage payments to make.
  • You are protected if the house value declines. If the house is worth less than the outstanding loan, neither the homeowner nor the heirs are responsible for the shortfall.

Here are some downsides to reverse mortgages:

  • There are fees and other costs. Lenders charge an origination fee, closing costs and servicing fees. Some charge mortgage insurance premiums for federally insured home equity conversion mortgages, or HECMs.
  • You owe more over time. Your loan collects interest, so the amount you owe grows. Interest adds up.
  • Interest rates may change over time. Depending on the kind of mortgage you take out, you may have fixed or variable rates. Make sure you understand your financial responsibilities before signing.
  • Interest is not tax-deductible each year. There is no tax break until the loan is paid off.
  • You have to pay other costs. You keep the title to your home, so you’re responsible for property taxes, insurance, utilities, fuel, maintenance and other expenses. If you don’t pay any of this, the lender might require you to repay your loan.
  • Your spouse may continue to live in the home after you die if he or she pays taxes and insurance and continues to maintain the property. But if your spouse wasn’t part of the loan agreement, no more money will be paid out.

There are three types of reverse mortgages:

  • Single-purpose reverse mortgages are the least expensive option, but loans like this are not available everywhere. The loan may be used for only one purpose, which the lender specifies. The lender might say the loan may be used only to pay for home repairs, improvements or property taxes. Homeowners with low to moderate incomes can qualify.
  • Proprietary reverse mortgages are private loans backed by the companies that develop them. If your home has a high appraised value and you have a small mortgage, you may qualify.
  • HECMs, which are federally insured reverse mortgages backed by the U.S. Department of Housing and Urban Development, can be used for any purpose.

HECMs and proprietary reverse mortgages may be more expensive than traditional home loans. Upfront costs can be high. This is an important aspect to consider, particularly if you plan to stay in your home for just a short time or borrow a small amount.

You may have much less income to work with once you retire, and paying your monthly mortgage payments may be rough. With a reverse mortgage, you can supplement a diminished income and continue to pay your bills.

Did you enjoy reading, Reverse Mortgage: Right for You?

 Interested in learning more about this subject? Attend our upcoming estate planning webinars!

Have You Properly Protected Your Loved Ones? (FREE Estate Planning Workshop), Trustee and Power of Attorney Training School Webinar, Medi-Cal Webinar, and/or Probate Webinar. Get registered today for our estate planning webinars!

This website is not intended to be a source of solicitation or legal advice. General information is made available for educational purposes only. The information on this blog is not an invitation for an attorney-client relationship, and website should not be used to substitute for obtaining legal advice from a licensed professional attorney in your state. Please call us at (626) 403-2292 if you wish to schedule an appointment for a legal consultation.

For more information about The Hayes Law Firm, visit our Google My Business page.

How Divorce Affects Your Estate Plan
The Hayes Law Firm Offices in South Pasadena, CA
How Divorce Affects Your Estate Plan
Don’t just take it from us. Read why others have rated The Hayes Law Firm, a “5-star” law firm.

Thanks for reading, Reverse Mortgage: Right for You?

  • Author
  • Recent Posts
Courtesy of The Hayes Law Firm
Latest posts by Courtesy of The Hayes Law Firm (see all)
  • Top 7 Celebrity Estates Impacted By Alzheimer’s Disease - May 25, 2022
  • Celebrity Estate Planning: Misfires of the Rich and Famous - May 18, 2022
  • Lessons To Be Learned From Failed Celebrity Estates - May 17, 2022

Blog Subscription

Sign up for our newsletter and get our news straight to your inbox!

Stay Informed

Where we are

The Hayes Law Firm
729 Mission St. #300
South Pasadena, CA 91030
Phone: (626) 403-2292
Fax: (626) 403-2299
Proud Memberaaepa

Office hours

Monday9:00 AM - 5:00 PM
Tuesday9:00 AM - 5:00 PM
Wednesday9:00 AM - 5:00 PM
Thursday9:00 AM - 5:00 PM
Friday9:00 AM - 5:00 PM

Map

map
  • Facebook
  • Instagram
  • LinkedIn
  • Pinterest
  • Twitter
  • YouTube

The information on this website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.

© 2022 · American Academy of Estate Planning Attorneys, Inc. | Disclaimer | Privacy Policy | Sitemap | Contact Us