A reverse mortgage loan is not for everyone. We can provide detailed loan scenarios to you (with your client’s permission) to help reach a decision that is aligned with the interest of all parties. We are upfront with all our clients about the advantages and disadvantages of a reverse mortgage.
Reverse mortgages provide many advantages for the senior borrower. Here is a short list of just a few:
Proceeds received from a reverse mortgage typically do not affect Social Security or Medicare.
Provides access to a portion of their home's value without the requirement of monthly mortgage payments. Borrowers must continue to meet ongoing property obligations such as homeowner’s insurance and property tax payments.
Could allow senior to purchase a new home with no monthly principal and interest mortgage payments.
Could provide a source of cash flow while borrower allows their investments to recover from market losses.
Improves a senior’s standard of living or allows them to live out their non-working years with fewer financial worries.
Pays off existing mortgage freeing up monthly cash flow which would have been committed to ongoing mortgage payments. With the reverse mortgage, there are no more required principal and interest mortgage payments.
Borrowers are required to live in their home as their primary residence, continue making payments for homeowner’s insurance and property tax charges and maintain the property per HUD requirements.
Allows the senior to maintain their independence while living in their own home.
Provides money for in-home health care or medical expenses.
Potential foreclosure of the home if the borrower does not meet the ongoing obligations of the loan such as paying property taxes, homeowner’s insurance or other required property charges, and must maintain the property per HUD requirements.
Uses equity that could be passed on to the estate or children.
The loan balance increases and the equity will decrease over time.
May affect eligibility for needs-based programs such as Medicaid.
For those itemizing tax deductions, a reverse mortgage can eliminate the deduction for home interest if no interest is paid out of pocket. However, if the homeowner pays the upfront fees and the accruing interest, the homeowner deduction may be available to them in the year the interest is paid.
There are closing costs and insurance that apply, so borrowers should plan on living in the home for more than a couple of years.
A Potential Reverse Mortgage Borrower
Substantial home equity with a limited or fixed income.
Wants to maintain or improve lifestyle.
Prefers to access mortgage loan proceeds instead of other accounts or sources which may be taxable.
Wants to remain in home and age in place utilizing a reverse mortgage.
Home Equity Conversion Mortgages are the only Reverse Mortgages insured by FHA.
NMLS#: 241661 | CA DRE #241661 | AZ LO-1046258 | C2 Financial DBA: Oxford Capital NMLS#: 135622 | DRE #01821025
This information is not intended to be a substitute for legal, tax or financial advice. Consult with a qualified attorney, accountant or financial advisor for additional legal or tax advice. These materials are not from HUD or FHA and were not approved by HUD or a government agency.
* There are some circumstances that will cause the loan to mature and the balance to become due and payable. The borrower(s) must continue to pay for property taxes and insurance and maintain the property to meet HUD standards or risk default.. Credit is subject to age, minimum income guidelines, credit history, and property qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.
This licensee is performing acts for which a real estate license is required. C2 Financial Corporation is licensed by the California Bureau of Real Estate, Broker # 01821025; NMLS # 135622. Loan approval is not guaranteed and is subject to lender review of information. All loan approvals are conditional and all conditions must be met by borrower. Loan is only approved when lender has issued approval in writing and is subject to the Lender conditions. Specified rates may not be available for all borrowers. Rate subject to change with market conditions. C2 Financial Corporation is an Equal Opportunity Mortgage Broker/Lender. For state licensing information outside of California, click here. As a broker, C2 Financial Corporation is NOT individually approved by the FHA or HUD, but C2 Financial Corporation is allowed to originate FHA loans based on their relationships with FHA approved lenders. Corporate Address: 10509 Vista Sorrento Pkwy #400 San Diego, CA 92121
Consumers in Texas: Consumers wishing to file a complaint against a company or a residential mortgage loan originator should complete and send a complaint form to the Texas Department of Savings and Mortgage Lending, 2601 North Lamar, Suite 201, Austin, Texas 78705. Complaint forms and instructions may be obtained from the department's website at www.sml.texas.gov. A toll-free consumer hotline is available at (877) 276-5550. The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed residential mortgage loan originators. A written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department's website at www.sml.texas.gov