62 is the Magic Number for a Reverse Mortgage

Almost 10,000 baby boomers per day are are turning age 62 and heading to Hilton Head Island for retirement.  You might ask what is so important about turning age 62… well age 62 is the minimum age to qualify for a FHA reverse mortgage and the costs to secure these mortgages is dropping.  Although the reverse mortgage has been available for more than 20 years, it is still misunderstood.  The most common misconception is that the bank owns the house;  that is not true.  The bank holds the mortgage, while the homeowner retains title.

Tax free funds and no monthly payments sounds good!

In today’s market most all reverse mortgages are government-insured FHA loans, that are called Home Equity Conversion Mortgages (HECM).  The reverse mortgage is a safe way for homeowners age 62 and older to access some equity in their homes to spend as they wish.  All funds are tax-free and reverse mortgages do not require the borrower to make a monthly payment to the lender.  In fact,  with a reverse mortgage, a homeowner can actually choose to receive a monthly tax-free payment instead of having to make a monthly payment. 

Up front costs are dropping for Reverse Mortgages

With the thousands of baby boomers retiring and the impact they will have on retirement trends, the reverse mortgage is a  mortgage programs that is becoming more popular.  As the program becomes more popular we are seeing some positive changes over the past few months.  In October 2010, HUD unveiled a new reverse mortgage, known as the HECM SAVER.  The SAVER program offers much less in upfront cost.  Instead of the standard 2% upfront MIP, the SAVER program has only .01% upfront MIP.  So on a $400,000 home, instead of having a 8k upfront MIP cost, the SAVER will be just $40.

Enjoy your hard earned equity 

With all that has happened to the stock market and specifically with retirees savings,  we can no longer ignore the equity in our homes as a way to help fund retirement and the reverse mortgage program is a wonderful way to maintain ownership of your home and Age in Place.  For more information about a reverse mortgage, contact Matt Topping of Wells Fargo Home Mortgage at 843-686-9375 or email  matt.topping@wellsfargo.com.  If you would like to start shopping for the perfect reverse mortgage property please visit www.HiltonHeadRealEstateNews.com