| There are plenty of benefits to the retirement years, | | | | equity loans |
| one of which is the ability to finally enjoy the time that | | | | Another reason why the number of RMs increased |
| was so limited during the years of building a career | | | | more than five-fold between 2001 and 2005 is that |
| and raising a family. The catch 22 is that along with the | | | | homeowners aren't required to pay taxes on the |
| extra time retirement offers there is often less money | | | | money they receive from these mortgages. Money |
| with which to enjoy that time. One of the largest | | | | disbursed through reverse mortgages are equity as |
| sources of available funds to tap into during the | | | | opposed to income, meaning that RMs don't have any |
| retirement years is home equity which can be | | | | impact of the amount of social security a retiree will |
| accessed and enjoyed thanks to reverse mortgages. | | | | receive. They have no impact on Social Security, |
| How reverse mortgages (RMs) differ from home | | | | Medicare or SSI. They also provide an excellent |
| equity loans | | | | source of tax free money. |
| RMs are one of the fastest growing home finance | | | | Accessing cash: reverse mortgages vs. home equity |
| products today and with good reason. Unlike home | | | | loans |
| equity loans, mortgages of this type don't require the | | | | With a home equity loan, homeowners generally have |
| homeowner to pay on a new loan. That's right, no | | | | access to a percentage of their home's appraised |
| payments ever. RMs are only available to those aged | | | | value less the balance owed on the existing mortgage. |
| 62 and over and become payable only when the | | | | A home equity loan may initially offer a higher |
| homeowner permanently leaves the residence. This | | | | percentage of the home's value, but only because |
| would occur if the home was sold, or upon the death | | | | payments are made each month that keep the loan |
| of the homeowners. | | | | balance level. |
| With a traditional home equity loan, the borrower goes | | | | Reverse mortgages work differently. There are no |
| through the entire home loan process including getting | | | | monthly payments of any kind, as long as you continue |
| a credit check and signing on the dotted line to repay a | | | | to live in the home. Interest that accrues is deferred. A |
| large sum of borrowed cash. Reverse mortgages are | | | | RM line of credit actually earns interest on the unused |
| just the opposite. There's no traditional credit check or | | | | portion of funds. The current yield on the FHA monthly |
| repayments with RMs, because homeowners are | | | | program is about 6.5%. With RMs, homeowners can |
| using the equity they have already accumulated. | | | | get more spending money over time than with |
| Tax implications of reverse mortgages and home | | | | traditional home equity loans. |