A seasoned New England financial professional, Edward (“Ed”) Marsi holds senior financial consultant responsibilities with TD Ameritrade. Among the areas of retirement planning that Edward Marsi has knowledge of is reverse mortgages, which are home equity loans specifically intended for homeowners age 62 or older.
Federally insured, this loan type provides funds to seniors without making them move from their primary residences. Reasons for the loans range from paying off debt to supplementing income and covering the maintenance costs associated with the home.
Those seniors able to access the loans either purchased the residence outright or have limited amounts remaining on their mortgage. The Federal Housing Administration sets the mortgage limit at no more than $636,150. At closing, the proceeds derived from the reverse loan are used in paying off the mortgage balance.
A benefit of the reverse mortgage is that no restrictions exist on how the loan money is used. A drawback is that after 12 months of the homeowners’ passing, or the home no longer being used as the primary residence, the loan becomes due. At this point, the estate has two options: repay the loan or put the home up for sale as a settlement method. This can limit the ability of one generation to pass a property to the next.