Expert Articles

Reverse Mortgage

by Scott Toler
President & CEO, Credit Union Mortgage Association

In partnership with your credit union, Credit Union Mortgage Association (CUMA) brings a unique opportunity to our home-owning members age 62 and older: the reverse mortgage.

Once thought of as a last resort to make ends meet during retirement years, a reverse mortgage no longer carries such a stigma. In fact, a reverse mortgage can be considered a valuable component of a well-balanced retirement plan.

Reverse Mortgage Basics

The opposite of a traditional mortgage, a reverse mortgage pays you money, by turning your home's equity into cash, a line of credit, monthly income, or some combination thereof. Funds are tax-free (tax-free in most circumstances, please check with your tax advisor) and provide a unique source of financial security to give you the freedom and peace of mind to fully enjoy your retirement years.

Use this source of funds for practically any purpose:

Pay off debt, including your existing mortgage.
Fund home repairs or renovations.
Pay property taxes.
Purchase a new car.
Finance a grandchild's education.
Earn a college degree.
Pay healthcare premiums or prescription drug co-pays.
Supplement daily living expenses.
Cushion against unexpected expenses.
Travel the world.
Almost anything!

Most importantly, with a reverse mortgage, you stay in your home, retain full title, receive payments, and continue to control your property, including maintenance, taxes, and insurance premiums.

Details For You

A reverse mortgage is available to homeowners age 62 years or older.
All owners on the title must meet the minimum age.
You need not own your home "free and clear."
There are no income, credit score, or medical/health qualifications.
The amount of funds granted depends on your age, the type of mortgage product chosen, your home's value, and current interest rates.
You may take your funds in a cash lump-sum, as a line of credit, or as a regular monthly payment.
One-time fees similar to that of any mortgage apply (origination fees, closing costs, inspections, insurance) and can be financed as part of the reverse mortgage.
You pay no monthly payment. Your reverse mortgage pays you!
You will never owe more than the current value of your home.
Social Security and Medicare benefits are generally not affected by a reverse mortgage. Consult appropriate government agencies for details.
The loan matures when you no longer occupy the home as your primary residence (i.e., sale, move, or death).
CUMA originates and closes the loan; initial discussions and closing can be arranged at your home for your convenience.

Details For Your Heirs

Your heirs do not lose the property (often considered their inheritance); they have the option to keep the home or sell it, just as they would regardless of a reverse mortgage.
Heirs simply pay off the reverse mortgage principal, plus accrued interest and service fees.
Should they wish to keep the home, they may take out a new traditional mortgage or use other assets to pay for it.
If they want to sell the home, they repay the loan from the proceeds and distribute any funds remaining according to your last wishes or will.
Your children or other trusted individuals are encouraged to meet with you and your CUMA Advisor to hear all loan options firsthand.

For More Information

Whether you wish to eliminate financial barriers to independent living or improve your quality of life during retirement, a complimentary consultation with a CUMA Advisor can help you decide if a reverse mortgage is right for you and your family.

Advisors are available in all 50 states, and a CUMA Representative will be happy to arrange a personal meeting for you and a trusted family member so you can learn more.

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