Hawaii's Reverse Mortgage Specialist!
Mary Joe Sato
20+ Years of Reverse Mortgage Experience
FREE Phone Consultation: (808)791-1044
What is a Reverse Mortgage?
A Home Equity Conversion Mortgage, or HECM, is a flexible financial product designed for homeowners aged 62 and older. The loan is insured by the Federal Housing Administration (FHA) so that borrowers will not owe more than the value of the home at maturity. With a HECM, also known as a reverse mortgage, you can convert some of the equity in your home into cash to meet financial goals, such as supplementing retirement income, maintaining a good lifestyle, or preparing for a more secure and rewarding financial future.
Of course, as homeowners, you are responsible for occupying the home as your primary residence, keeping up with property maintenance, and staying current on paying property taxes, required insurance and any homeowners’ fees. Instead of repaying the loan in monthly installments, you or your estate repay the principal, accrued fees and interest when you no longer live in the home.
What Are the Basic Reverse Mortgage Requirements?
- Borrowers must be age 62 years or older
- Own their home and have enough equity to qualify
- Occupy the home as primary residence
- Receive counseling by an approved HUD/FHA counselor
- The home must be in reasonably good repair...
How Much Money Can I Get?
The specific amount depends on several factors, including:
- Your age
- The type of reverse mortgage you select
- Current interest rates
- Appraised value of your home
- Federal Housing Administration (FHA) lending limits
HUD also regulates the amount of money that can be withdrawn during the first year of your reverse mortgage. This is to help preserve your home equity for a longer period of time. Please call Mary Joe Sato at (808)791-1044 for a FREE Reverse Mortgage quote!
How Can I Receive My Reverse Mortgage Money?
When it comes to getting your payment, you determine how you’d like to receive your funds based on your individual financial needs and objectives. For example:
- A monthly payment will supplement your income each month.
- A lump sum will provide your available funds at once, subject to initial disbursement limits.
- A line of credit will allow you to withdraw cash as you need it.
- Any combination of the above
What are the pros and cons of a reverse mortgage?
Pros of Reverse Mortgages
- Access home equity. You are able to access your home equity, likely a substantial portion of your wealth, without having to leave your home.
- Remain in your home. As long as you keep your loan in good standing, you may remain in the home for as long as you live.
- Defer payments. You can defer payments until you leave the home or pass away.
- Flexibility. The Home Equity Conversion Mortgage (HECM) program is extremely flexible in terms of withdrawing the proceeds of your loan.
- Line of credit. HECM’s credit line option can be incredibly attractive, as an unused credit line will grow over time.
- Pay off debt. It can be useful for paying off a mortgage or expensive consumer debt.
- Limit on what you owe. Neither you nor your heirs will ever owe more than the home is worth.
Cons of a Reverse Mortgages
- Can be expensive. Closing costs are financed into the loan.
- Choices to make with complex tradeoffs. Though you will have help from a HECM counselor and hopefully other advisors, you will need to make a complicated decision.
- Use up your home equity. In many cases, you will end up using up a large portion of your home equity, both in the cash you withdraw and the interest that accrues over time.
- Move out and the loan becomes due. Sell your house to pay back the reverse mortgage balance. Or refinance back to a tradional mortgage at anytime.
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