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How It Works
Reverse Mortgage Key Benefits
A reverse mortgage is simply a way for older adults to access the equity in their home to pay for the necessities of life or some extras they may want to enjoy—while allowing them to keep their homes. It gives them the ability to turn the value of their home into cash
without having to repay a loan each month.
Homeowners age 62 or older who live in the home as their principal residence are eligible. The home has to have little or no debt remaining on it, and meet the Department of Housing and Urban Development (HUD) minimum property standards, although the reverse mortgage may be used to pay for any required repairs. If there is a remaining conventional mortgage, the property owner may still be eligible. In that case, the reverse
mortgage would be first used to pay off the existing mortgage(s).
Borrowers retain ownership of the home. This means they’re still responsible for paying
property taxes and homeowners insurance and making property repairs. They can continue to live in the home as long as they want, and the loan doesn’t have to be repaid
until they leave or sell the home.
There aren’t any monthly mortgage payments.* That’s why they call it a “reverse” mortgage. Unlike traditional forward mortgages, with a reverse mortgage, the bank pays the loan proceeds to the borrower. However, the homeowner is still responsible
for keeping insurance and property taxes current and upkeep of the home.
Borrowers can receive the proceeds from a reverse mortgage loan in several ways:
in a lump sum, a monthly cash advance, a line of credit, or a combination of these options.
The amount the borrowers can receive depends on: the homeowners’ ages, the type of reverse mortgage, current interest rates, home location, appraised value of the home, and the amount of equity in the home—subject to the Federal Housing Administration’s
national lending limit of $625,500.
Some of the reasons why people get a reverse mortgage are: to continue living in the home and remain independent, to ease financial anxiety, and to offer a more fulfilling life.
Common uses include:
- paying for monthly living expenses
- prescription drug or medical bills
- home repair and improvement
- an automobile
- establishing a cash account for unforeseen expenses
- or giving themselves some peace of mind
It is not encouraged or recommended that reverse mortgage proceeds be used to fund new or existing investment or annuity products.
© Mortgage Services III, LLC (MSI Reverse) Reverse Mortgage Division | 502 North Hershey Road | Bloomington, IL 61704
NMLS # 172606 Mortgage Services III, LLC is a wholly owned subsidiary of First State Bank; Member FDIC; Equal Housing Lender
Disclaimer: A reverse mortgage is a loan and must be repaid. Homeowners must pay property taxes and insurance and any
applicable homeowner’s association fees or dues.