If you own the home you live in (free and clear or have a minimal remaining mortgage balance) a reverse mortgage with Security Reverse can help you receive extra tax free income. A reverse mortgage allows you to borrow against the equity you’ve established in your house without repaying the loan for as long as you live there. Instead of making monthly payments to the bank, the bank makes payments to you! That’s why it’s called a "reverse" mortgage.

The income received through a reverse mortgage can be used for a variety of purposes. The uses are only limited by your imagination.

 Here are some ways people have used the proceeds from a reverse mortgage:

• Make needed home repairs and home improvements
• Pay property taxes
• Pay for in-home care services
• Cover rising medical costs
• Travel - Take the trip you have always wanted
• Ease the financial burden on your children
• Replace lost income

A reverse mortgage is the opposite of a traditional mortgage. With a traditional mortgage or home equity loan, you borrow a large amount of money which you are expected to pay back on in monthly payments. You must also have the income and credit to qualify for a traditional mortgage.

A reverse mortgage pays you each month and is available regardless of your current income or credit. With a reverse mortgage, you borrow small amounts monthly or at other intervals through a line of credit. Payment is required only once, at the end of the loan, typically when you no longer occupy the home as your principal residence.

For many senior home owners, a reverse mortgage is an effective way to convert home equity into flexible, tax-free income. The benefits are numerous:

• Continue to live in and own your home!
• Receive tax-free income from the cash advances.
• Obtain immediate cash advances in addition to monthly income.
• Have peace of mind knowing that you and your heirs have no personal liability for repayment of the loan since it is secured solely by your house.
• Relax knowing that you owe nothing until after you no longer occupy the home as your principal residence.
• Enjoy the flexibility of determining how you wish to receive your cash disbursements: Fixed monthly payments, a line of credit, a lump sum of cash, or a combination of these options.

The eligibility requirements are quite simple. There are no income, employment or credit restrictions.

• All homeowners must be 62 or older and occupy the property as their principal residence
• The home must be owned free and clear or have a remaining mortgage balance which can be paid off by a reverse mortgage (positive equity balance).
• The property must be a single-family or a two-to-four unit dwelling.
• Town homes, detached homes, condominium units, planned unit developments (PUDs) and some manufactured homes are eligible,
• The home must meet HUD minimum property standards. In some cases, home repairs can be made after the closing of a reverse mortgage.

The maximum amount that can be borrowed is based on the following factors:

• The age of the youngest homeowner
• The appraised value of the home
• The current interest rate for the reverse mortgage
• The county in which the property is located

In general, the more your home is worth, the older you are, and the lower the interest rate, the more cash you will get.

Customers have unique needs. Some prefer to get the entire amount available at once, while others would prefer a steady monthly payment to supplement their income. Regardless of which distribution plan you pick, you are able to adjust your plan as often as you wish as your needs change.

There are four common types of reverse mortgage distribution plans, and they can be combined to fit your own specific needs and desires.

Cash is immediately available (often used to pay off an existing mortgage and other debts).

Equal monthly payments for a fixed period of months selected.

Equal monthly payments as long as at least one homeowner is alive and continues to occupy the property as a principal residence.

A credit line which the customer can draw upon as he or she wishes.

An immediate cash advance in addition to monthly allotments.

Your loan will be made based on an adjustable rate loan. You have the option of choosing a monthly or annually adjusting rate. Rates are linked to the one-year U.S. Treasury Security Rate.

The change in the interest rate has no effect on the amount or number of loan advances you can receive, but causes the loan balance to grow faster (or slower) depending on  rate fluctuations.

The loan is due and payable when you no longer occupy the property as your principal residence.

The only requirement is that the loan be repaid in one payment. There is no requirement that the property be sold, only that the loan is repaid. This may occur either through the sale of the home or through other resources (such as savings or possibly applying for a new mortgage).

Loan proceeds are not considered income and will not affect Social Security or Medicare benefits because these programs are not based on need.

However, your monthly reverse mortgage advances may affect your eligibility for some other government programs. Consult your local program offices to determine how, or if, monthly reverse mortgage payments might affect your specific situation.

The process of getting a reverse mortgage involves the simple steps outlined below.

This is the phase that you are at now. You’re taking the time to learn about the reverse mortgage program to determine if it is appropriate for your situation.

As part of the reverse mortgage application process, you are required to participate in a consumer education session with a HUD-approved counselor.

The counselor will explain the legal and financial obligations of the program as well as any alternatives you may have. A reverse mortgage is not for everyone, so this step will help you ensure you are making the right decision.

After the session has been completed, you are given a Certificate of Borrower Counseling, which is valid for 180 days after the session. You must then present this certificate to the lender as proof that you have attended and completed the counseling session.

Your reverse mortgage consultant will discuss the details with you and help you complete and sign the loan paperwork. Once you have submitted your completed application, you will receive a disclosure of the estimated total cost of the loan, as required by the Federal Truth in Lending Act.

A professional appraiser will be used to determine the value of your home which will be used to calculate the amount you can receive as part of your reverse mortgage.

Most lenders will require that you show proof that you have purchased home insurance or hazard insurance which will protect you in case your home is destroyed as a result of fire, theft or some other disaster. If you already have home insurance, make sure your policy is up to date, payments are current, and you have the minimum amount of coverage required by your lender (if applicable). You may, however, want to purchase a larger policy to make sure you’re protected from any additional losses.

You will also be required to pay FHA mortgage insurance. This will protect you and your heirs by insuring that the amount required for repayment of the loan will never exceed the value of your home when payment is due. An initial premium will be due when closing your loan. This payment is financed as part of your reverse mortgage proceeds. In fact you can finance all of the costs to have no out-of-pocket expenses whatsoever.

There are two types of title insurance: One protects the lender and one protects the borrower.

Title insurance is purchased as protection from claims against your ownership of the property. Such claims may be made by undisclosed spouses, heirs of previous owners, creditors holding liens against previous owners, or other parties.

Your lender will most likely require you to purchase a title insurance policy, which will cover their interests in the property. It’s up to you to purchase a policy to protect your interest in the home. Your reverse mortgage consultant will be able to recommend a title insurance company who can provide additional information about the policies available in your area.

Loan processing typically takes 4-6 weeks before the closing can take place. The closing for a reverse mortgage is usually done in your home or title company office. The loan documents, including the mortgage or deed of trust, are forwarded to you to sign where directed. You then have 3 days from signing the documents to cancel the reverse mortgage if you change your mind. Any cash disbursements due to you will be forwarded from the processing center after the 3 days have expired.

Closings must be coordinated with many parties that may include: the lender, yourself, your attorney, and the title representative or closing agent. Your reverse mortgage consultant or closing agent will help arrange a date that all parties can agree to.

A few days before the closing, your reverse mortgage consultant will help you go through a checklist of what you’ll need to finalize and close your loan. Including:

• Closing costs and escrow amounts

Your Good Faith Estimate may not include all closing costs such as interim interest or property taxes. Finalize actual costs at this time with your closing agent to avoid last-minute surprises.

• Acceptable Method of Payment

In most cases certified or cashier’s checks must be prepared in advance.

• Any additional items needed

Some counties require photo ID, evidence of hazard or flood insurance or other miscellaneous documents. This is the time to gather any ID and miscellaneous paperwork that may be required at closing.

With a reverse Mortgage, you have responsibilities similar to those associated with a traditional mortgage.

You are expected to:

• Pay property taxes
• Keep adequate property insurance up-to-date
• Maintain the home

Reverse Mortgages Myth: The Lender will own my home
Fact: You and your family or your estate continues to retain ownership of the home. The lender’s interest is limited to the loan balance and the lender will not take control of the title.

Reverse mortgage myth: If my loan is sold, the terms will change
Fact: The terms of your loan can NEVER change. All loans end up with investors, but you sign legal documents that ensure the terms of your loan cannot change.

Reverse Mortgage Myth: I will owe money if the loan amount exceeds the value of home.
Fact: All reverse mortgages are non-recourse loans, which mean that the borrower can never owe more than the value of the home regardless of the loan balance. This protects you if the value of your home goes down in a poor real estate market.

Reverse Mortgage Myth: My Social Security and Medical Benefits will be affected.
Fact: A reverse mortgage will not affect these or most other benefits as long as the monthly cash advances are fully spent every month and not accumulated. Programs do vary by state so check with your local area Agency on Aging.

Revere Mortgage Myth: My heirs will be burdened.
Fact: Repayment of the loan can be accomplished by refinancing the existing reverse mortgage or with proceeds from the sale of the home. Your heirs have 6 months and in some cases up to 1 year to repay the reverse mortgage.

Reverse Mortgage Myth: I must be debt free to qualify for a Reverse Mortgage.
Fact: You may have a mortgage or other debt on your home. The mortgage or debt must be paid off with the proceeds of the reverse mortgage. Eliminating debt is one of the benefits of a reverse mortgage.

Reverse Mortgage Myth: I must be in good health to qualify.
Fact: A reverse mortgage has no medical requirements.

Reverse Mortgage Myth: I must have a steady income to qualify.
Fact: A reverse mortgage has no income or credit requirements

Reverse Mortgage Myth: Only cash poor and desperate senior citizens can benefit from a Reverse Mortgage.
Fact: Even though some seniors may have greater need than others for cash or a monthly income, the reverse mortgage can be an excellent way for anyone who qualifies to free up money from the equity in their home.

Getting a reverse mortgage is more than just getting a loan. Your Security Reverse Mortgage Educator should help you find the best program for your needs and provide any additional guidance you might need along the way. Here’s what to look for:

A reverse mortgage is a very specialized product and requires special attention and training on the part of the reverse mortgage consultant. Always look for a company that is 100% focused on reverse mortgages rather than a company that is fragmented in the market place.

If a company asks for any money up-front you should consider another company that does not ask for up-front fees and deposits.

If a company has a culture of "by referral only," this means that the service will be top notch. For a person to refer one of their friends or family members, that person must have had a good experience. The "by referral only" company will keep the customer informed on all details throughout the process and deliver beyond their expectations.

Our specially trained and highly qualified reverse mortgage educators are focused on finding the program that works best for you, not just closing a loan. Their goal is to provide you with clear advice, taking into account your short and long term financial objectives. We want you to make an informed decision.

You can expect annual telephone reviews of your reverse mortgage from Security Reverse Mortgage. It is vitally important to us that you maximize your reverse mortgage to achieve your goals. We will inform you of any changes in the program, increases in your home’s value and opportunities to obtain additional advances.