• Menu
  • Skip to right header navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Before Header

781-843-5553  |  Blog  |  Request a Consultation  |  Contact

Harbor Mortgage Solutions

Mortgage Services for Massachusetts and Rhode Island

  • Conventional Mortgages
    • Buying a Home
    • Home Equity Financing
    • Refinancing Your Home
  • Reverse Mortgages
    • Types of Reverse Mortgages
    • Reverse Mortgages for Condominium Owners
    • Reverse Mortgage Information
    • Navigating the Reverse Mortgage Process
    • Reverse Mortgage Rules
    • Reverse Mortgage Myths
  • Resources
    • Blog
    • Webinars
    • FAQs
    • Glossary of Terms
  • About Us
    • Meet Our Team
    • Professional Network
  • Conventional Mortgages
    • Buying a Home
    • Home Equity Financing
    • Refinancing Your Home
  • Reverse Mortgages
    • Types of Reverse Mortgages
    • Reverse Mortgages for Condominium Owners
    • Reverse Mortgage Information
    • Navigating the Reverse Mortgage Process
    • Reverse Mortgage Rules
    • Reverse Mortgage Myths
  • Resources
    • Blog
    • Webinars
    • FAQs
    • Glossary of Terms
  • About Us
    • Meet Our Team
    • Professional Network

How Savvy Homeowners Use Reverse Mortgages to Increase Financial Security – Others Not So Sure.

February 8, 2021 //  by George Downey

Financial advisors, recognizing the need to increase retirement funding, are promoting the versatility and innovative solutions provided by reverse mortgages to make use of home equity. However, a legacy of misinformation and old myths prevail that continue to misguide some homeowners.

Mark Twain could have been talking about reverse mortgages when he wrote: “What gets us into trouble is not what we don’t know. It’s what we know for sure that just ain’t so.”

Often disparaged and misconstrued, the HUD/FHA insured Home Equity Conversion Mortgage (HECM) reverse mortgage was created to help aging homeowners utilize a portion of their home equity (housing wealth) to increase financial security.  The HECM terms, uniquely designed to bolster retirement finances, are often misunderstood and thought to be inappropriate.  That is changing as more financial advisors and homeowners are enlightened and learn the facts.

HECM FACTS VS. FICTION
FICTIONFACT
Bank owns the home – borrowers must transfer title to the lenderBorrowers never give up ownership
Loan of last resort – only suitable for those who are desperate or not eligible for traditional financing.A valuable financial resource to increase access to cash and extend retirement security without monthly payment obligations.
Home must be owned free and clear to be eligibleMost borrowers use proceeds to pay off existing mortgages and eliminate payment obligations
Loan costs are significantly higher – lenders charge excessive feesFHA regulates costs, which include standard loan costs + FHA insurance premiums. Lenders cannot charge excessive fees.
If the loan balance grows to exceed the home value, the borrower or the estate is liable for the differenceReverse mortgages are non-recourse loans – neither the borrower or the estate will ever owe more than the property value at the time of repayment.
Funding can be reduced or frozen if/when financial or real estate markets decline.Access to funds and loan terms are guaranteed by FHA insurance – can never be changed as long as loan remains in good standing 

Reverse Mortgage Benefits

  • No monthly payment obligations – prepayments are permitted without penalty but not required. Monthly charges are deferred and accrue.
  • Credit line growth – the undrawn balance of the credit line grows (compounding monthly) at the same rate charged on funds borrowed.
  • No maturity date – repayment not required until no borrower resides in the property.
  • Non-Recourse loan – neither borrowers nor heirs incur personal liability.  Repayment of loan balance can never exceed the property value at the time of repayment.  If loan balance exceeds property value at time of repayment, the lender and borrower(s) are protected by FHA insurance.
  • Access to funds and loan terms are guaranteed – cannot be frozen or cancelled as long as the loan remains in good standing.
  • Borrower obligations (to keep loan in good standing) are limited to:
    • Keeping real estate taxes, liability insurance, and property charges current
    • Providing basic home maintenance
    • Living in the property as primary residence

To Learn More         

While reverse mortgage offers valuable and distinctive benefits, it is not suitable for everyone. To determine if one could be a good fit, consult a Certified Reverse Mortgage Professional (CRMP).  Extensive information about reverse mortgages and a list of CRMPs is available at www.ReverseMortgage.org, the website of the National Reverse Mortgage Lenders Association, Washington, DC.

George Downey, CRMP, (NMLS 10239), is the CEO and founder of Harbor Mortgage Solutions, Inc., Braintree, MA, a mortgage broker licensed in Massachusetts (MB 2846), Rhode Island (20041821LB), NMLS #2846.  Questions and comments are welcome.  Mr. Downey can be reached at (781) 843-5553, or email: GDowney@HarborMortgage.com

Category: Uncategorized

Previous Post: « What to Do If You’re Worried About Running Out of Money

Primary Sidebar

Recent Posts

  • How Savvy Homeowners Use Reverse Mortgages to Increase Financial Security – Others Not So Sure.
  • What to Do If You’re Worried About Running Out of Money
  • How Medical Costs Can Be Paid with Home Equity
  • How Aging Homeowners Can Permanently Eliminate Monthly Mortgage Payments Without Selling or Moving
  • How to Avoid Going Broke in Retirement

Footer

Harbor Mortgage Solutions, Inc.
100 Grandview Road, Suite 105
Braintree, MA 02184

781-843-5553 Local
781-843-6661 Fax
800-599-8700 Toll free

Follow Us on FacebookFollow Us on TwitterFollow Us on LinkedInFollow Us on YouTube

NMLS #2846
Massachusetts License MB2846
Rhode Island License 20041821LB

We are a mortgage broker. We do not make loans – we arrange residential mortgage loans through our diverse network of national and local banks and other institutional lenders.

Copyright © 2021 · Harbor Mortgage Solutions, Inc., 100 Grandview Road, Suite 105 | 781-843-5553 · All Rights Reserved