A reverse mortgage could be an ideal way for you to benefit from the real estate investment you’ve made. Below is some quick reverse mortgage information to help you and your family members decide if it’s the best option for you.
An improved quality of life
A reverse mortgage can provide a new source of tax-free money for life’s necessities, or the little luxuries you might not otherwise be able to afford. Be sure to consult your financial or tax advisor(s) regarding your particular situation.
Financial independence means dignity
A reverse mortgage enables you, as a homeowner 62 years of age or older, to tap into what’s yours and avoid having to depend on relatives for financial assistance.
Keeping your house
Not only will you retain full title to your home, but very often, the reverse mortgage funds will enable you to keep your home. The homeowner must also continue to occupy the home as their primary residence, keep it in good repair, with all taxes and insurance premiums kept up to date, subject to the terms of the mortgage.
Reverse mortgage repayment options
Your heir(s) can opt to pay it off using a new mortgage/other assets or the proceeds from the sale of the home. Any money left over goes to the estate to be shared per your wishes. The repayment amoun of a reverse mortgage cannot exceed the home's value. In the event the home sells for less than the loan amont your heirs are not responsible for the balance.
Costs & fees
Interest and a monthly reverse mortgage lender servicing fee will be charged on the outstanding loan balance, but these costs will not be due until the loan is paid off. Closing costs can be paid directly out of the loan proceeds; however appraisal and counseling fees may apply during the application process.
Reverse mortgage proceeds are typically considered loan advances and are not taxable. Similarly, your Social Security or Medicare benefits should not be affected. If you receive SSI, Medicaid, or other public assistance, your loan advances are typically counted as "liquid assets" if kept in an account past the end of the calendar month in which you receive them. You must be careful not to let your total liquid assets become greater than these programs allow. Consult your tax advisor.
For friends and family
There’s always the chance a disreputable reverse mortgage lender could take advantage of a borrower. You and your loved ones should:
- Lookout for scams – be leery of any person attempting to sell an annuity using reverse mortgage proceeds or suggesting a younger spouse, under age 62, be removed from the title of the home in order to qualify
- Work with a reputable lender – M&T has been a reverse mortgage provider since 1998. As an active member of NRMLA (National Reverse Mortgage Lenders Association), we ensure our reverse mortgage specialists receive comprehensive reverse mortgage training
- Take advantage of the process – Reverse mortgage counseling is required prior to applying. This simple step can be completed over the telephone, and is another opportunity to ensure everyone understands how a reverse mortgage works. Typically there is no cost to you, but some agencies may charge a fee for this service
- Know the TALC – TALC (Total Annual Loan Cost) combines all of the reverse mortgage costs into a single annual average rate and can be very useful when comparing one type of reverse mortgage to another
- Involve Advisors – Family, friends and professional advisors can provide outside counsel if you are unsure whether a reverse mortgage makes sense. The lender selected should welcome the participation of family or trusted friends in the process, if that’s what you wish, and encourage everyone to ask as many questions as possible.
Get started now
Read our reverse mortgage FAQs for additional reverse mortgage information. To learn more about the reverse mortgage process call 1-888-253-0712, submit your request online or visit a branch to speak to an M&T reverse mortgage specialist.