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Reverse Your Thinking

Retirement Mortgages

A retirement mortgage is designed for your stage in life helping prepare you for retirement while addressing your overall financial goals. It takes advantage of your most powerful asset – YOUR HOME.

SCHEDULE A CONSULTATION

Reverse Your Thinking

Retirement Mortgages

A retirement mortgage is designed for your stage in life helping prepare you for retirement while addressing your overall financial goals. It takes advantage of your most powerful asset – YOUR HOME.

SCHEDULE A CONSULTATION

The Home Equity Conversion Mortgage (HECM)

Reverse Mortgage Insured by the Federal Government

A reverse mortgage may be a safer option than a traditional mortgage or line of credit. Here is why:

  • It allows homeowners to access their equity for any reason without being required to make a monthly payment. 
  • It offers financial planning and retirement investment strategies that are not possible with a traditional mortgage.
  • And provides housing security and financial protection superior to a traditional mortgage.

Read about additional mortgage solutions available to homeowners above the age of 55. 

Browse our video archive for more brief explainer videos about reverse mortgages.

Watch more videos

What Can A Reverse Mortgage Do?

Financial Planning
  • Pay off current mortgage (if applicable)
  • Eliminate monthly payment
  • Increase cash flow
  • Debt consolidation
Access Equity
  • Get a line of credit that is available when needed and that grows over time
  • Home improvement
  • Emergency fund
  • Fund medical and long-term care needs
Build Wealth
  • Purchase a new home
  • Minimize income taxes and allow other investments to grow
  • Retain ownership and future appreciation
  • Fund investments and acquisition of other assets
Asset Protection
  • Housing security
  • Estate planning
  • Protect spouse

A REAL LIFE EXPERIENCE

How a reverse mortgage created a huge benefit for one couple.

Edward and Mary are a retired married couple in their 70s. They own a home worth $400,000 and owe about $100,000 on their mortgage. Their monthly payment runs $1,200. If either Edward or Mary passes on, the surviving spouse is left in a difficult financial situation with lowered Social Security benefits.

The couple decided on a reverse mortgage to get rid of their monthly mortgage payment. It protects Edward and Mary from financial disaster should one of them require long-term care or pass away, and frees up money for the home improvement projects they’ve been wanting to take on.

Reverse Mortgage Myths vs. Facts

Slide

A reverse mortgage is a loan of last resort for desperate people.

FACT

Reverse mortgages have evolved from strictly a needs-based product to a solution that many financial planners recommend as an important component of a comprehensive retirement plan and a retirement income strategy. Among the reasons people use a reverse mortgage are the ability to supplement income and increase monthly cash flow, increase access to liquid assets, extend the life of other financial assets, minimize income taxes, and gain financial flexibility in retirement.

Slide

When you get a reverse mortgage, the bank owns the home, you no longer do.

FACT

This is by far the number one misconception that people have. The truth is a homeowner retains title and 100% ownership with a reverse mortgage.

Slide

The bank gets your home when you pass away and not your children or other beneficiaries.

FACT

When a homeowner passes away, their ownership interest goes into their estate or is transferred to the joint tenant the same as if there were not a reverse mortgage on the property.

Slide

My kids or other beneficiaries will be on the hook for a big liability.

FACT

Borrowers can leave their home to their kids or other beneficiaries. When the borrowers pass away, the beneficiaries have the same options as they do if there is a regular mortgage on the property. Additionally, a reverse mortgage is non-recourse so the beneficiaries are never responsible under a reverse mortgage.

Slide

The bank can foreclose if you owe more than the house is worth.

FACT

The only requirements to remain in the home are that the property taxes and insurance are paid, the HOA dues (if applicable) are current, the house is reasonably maintained, and that the last surviving borrower or an eligible non-borrowing spouse does not vacate the house for more than 12 consecutive months. Even if you owe more than the house is worth, the bank CANNOT foreclose if you continue to meet these requirements.

Slide

You can only get a reverse mortgage if you do not currently have a mortgage.

FACT

One of the primary benefits of a reverse mortgage is the planning opportunity that exists if there is not a current mortgage on the property.

Slide

My spouse can be forced to move out of the home if I die.

FACT

Borrowing spouses and eligible nonborrowing spouses can remain in the home after the co-borrower or the primary borrower passes away. The spouse only needs to continue to meet the conditions of the loan (see myth 5). In many ways this provides more protection than a regular mortgage. This factor is one of the prime non-financial benefits of a reverse mortgage.

Slide

I cannot ever sell my house if I have a reverse mortgage.

FACT

While a reverse mortgage is better suited for people who plan to remain in the home long-term, if circumstances change the home can be sold at any time. You simply sell the home, pay off the balance with the proceeds of the sale, and the remaining equity is yours to keep. No different than any other mortgage. A reverse mortgage does not have a prepayment penalty.

Slide

Social Security and Medicare will be affected.

FACT

A Reverse Mortgage will not have any effect on your Social Security payments or Medicare benefits. However, there could be an impact on Medicaid or other public assistance programs that are means tested. Talk to your adviser to make sure you fully understand the impact if you have means tested benefits.

Slide

I will have to pay taxes on the money I get from a reverse mortgage.

FACT

The proceeds from a reverse mortgage, whether paid in a lump sum or periodically, are not subject to income tax. Consult a tax advisor for more information.

Slide

Reverse mortgages are extremely costly.

FACT

The fees will vary depending on the type of reverse mortgage selected and the strategies that are being pursued. In some (not all) cases the costs will be higher than a traditional mortgage, however, the benefits can be much more significant than a traditional mortgage as well. A cost benefit analysis can be analyzed once there is an understanding of the benefits that can be derived. In most cases, the borrower will include the costs associated in the loan amount and will not have any out-of-pocket costs.

Slide

Reverse mortgage interest rates are higher.

FACT

Reverse mortgages are guaranteed by the Federal Housing Authority (FHA). FHA interest rates on a reverse mortgage are comparable to traditional mortgage rates.

Slide

Reverse mortgages have hidden risks that can cost you your home.

FACT

The terms of a reverse mortgage are very clear. A borrower must pay their property taxes, homeowner’s insurance, keep the property in good repair and must maintain the property as their primary residence. These obligations are not hidden. In fact, it can be argued that a regular mortgage carries substantially more risk of losing the house than a reverse mortgage.

Slide

A reverse mortgage will use up all my equity and reduce the amount available for inter-generational wealth transfers to my kids, grandkids or other beneficiaries.

FACT

When used in a strategic manner, the use of a reverse mortgage can result in a greater ability to pass on wealth since it can be used to preserve other financial assets that can continue to grow.

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OTHER MORTGAGE SOLUTIONS

REVERSE PURCHASE MORTGAGE

A reverse mortgage that is used to purchase a home, downsize or upsize, relocate to be closer to family and friends, or to live in a warmer climate.

The benefits of a reverse purchase mortgage are:

  • Improving purchasing power
  • Improving cash flow
  • Allowing for asset diversification
  • Providing a better solution for financial, retirement and estate planning
  • Retaining ownership and 100% of future appreciation

PROPRIETARY REVERSE MORTGAGE

Proprietary reverse mortgages are offered by private lenders and are not guaranteed by the federal government like the Home Equity Conversion Mortgage (HECM).

They are also referred to as jumbo reverse mortgages since the maximum loan amount is 4 million, substantially more than a HECM.

Features of a reverse purchase mortgage are:

  • Larger amounts of money are available when dealing with higher value properties
  • Costs are lower than with an HECM Mortgage
  • The minimum age is 55 versus 62 for the HECM
  • It may be the only option for homeowners who own condominiums

REVERSE SECOND MORTGAGE

An alternative that leaves a low rate first mortgage in place but gives the homeowner access to their equity (cash) without the burden of having to make a monthly payment for the amount borrowed or the burden and cost of refinancing.

The benefits of a reverse second mortgage are:

  • Turns equity into cash
  • Does not require a monthly payment
  • Does not require the homeowner to refinance and does not impact the current mortgage

EQUITY AVAIL MORTGAGE

A new innovative hybrid mortgage for individuals 55 or older. Provides for a lower monthly payment for the first 10 years compared to a traditional mortgage.  After 10 years the mortgage automatically converts to a reverse mortgage and monthly payments are not required for as long as the homeowner lives in the house. 

Features of an equity avail mortgage are:

  • Replaces your current mortgage
  • Lowers monthly payment for 10 years
  • Converts to a reverse mortgage with no monthly payments required after 10 years
  • Offers the potential to take additional cash out

(Not available in every state.)

WHAT OUR CLIENTS SAY

The entire process was timely and complete. The attention to detail was appreciated. Nicely done.” – Marv Achterberg

The reverse mortgage has enabled me to live on my pension without any worries. It has worked out well for me, I would recommend it to anyone in the market these days. – Dave W.

Spectra Mortgage Corporation
3900 South Wadsworth Boulevard
Suite 415
Lakewood, CO 80235

Ph: 303-468-1985

YOUR MORTGAGE SHOULD WORK FOR YOU

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