The New Reverse Mortgage Formula: How to Convert Home Equity Into Tax-Free Income

Live on your equity—without selling or refinancing your home!

Many seniors have trouble making ends meet after retirement. Often their homes are their most valuable assets, but they can't access the equity they've accrued unless they sell. If you find yourself in this position, you might face the dilemma of having to sell your home. Thankfully, the reverse mortgage offers seniors the option of remaining in their homes with no mortgage payments.

Reverse mortgages permit seniors to convert part of their home equity into tax-free income—even if they're still paying on the mortgage. Designed specifically for seniors, these specialized loans let you tap into your equity and use the money for any purpose. Safe and legal, these loans can never cost more than the value of the home, and the loan doesn't have to be repaid until you, or an heir, sell the home.

This straightforward, simple guide helps seniors and their loved ones understand every aspect of the reverse mortgage, including:

• Tax ramifications of reverse mortgages
• Fees and costs associated with reverse mortgages
• Great things you can do with your reverse mortgage payout
• Calculating a reverse mortgage based on the owner's age, and the home's location and value
• How to structure your payout as a lump sum, monthly payments, or credit
• How much you can borrow and at what rate

"As our population ages, it is critical that senior citizens are made aware of the various options available to them that will enable them to lead more fulfilling, comfortable lives. In this book, Tom Kelly clearly and concisely explains the inner workings of reverse mortgages—a viable financial option for senior homeowners."

—Sarah Hulbert, National Director, Reverse Mortgage of America

"Tom Kelly breaks down a misunderstood, complex topic into a very readable, valuable work for seniors and adult children. This book not only provides one of the key tools to aging in place, but it also clearly and accurately explains the next big financial vehicle in the United States."

—Dr. Richard Garrigan, author and Emeritus Professor of Finance, DePaul University

The host of the Seattle radio show Real Estate Today shares his expertise on the misunderstood financial tool of a reverse mortgage. Treating this option for homeowners of the baby boom generation nearing retirement, Kelly explains its evolution, benefits, costs, uses, and other considerations. The guide includes recommended readings, sample amortization schedules, and resources (national and state).
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The New Reverse Mortgage Formula explains reverse mortgages in easy language so seniors and their family members can fully understand and benefit from these useful loan products. Reverse loans allow seniors to convert part of their home equity into tax-free income, letting seniors easily borrow against the value of their home without selling it. Safer than ever, today’s reverse mortgages are non-recourse loans and lenders do not share in any appreciation or accrued equity. Safe and simple, reverse mortgages are a valuable option for senior homeowners having trouble living on a fixed income or in need of extra cash for any unforeseen expense.

A straightforward explanation of the ins and outs of reverse mortgages

This book explains reverse mortgages in easy language so seniors (or their family members) can fully understand, and benefit from, these loans. Reverse loans allow seniors to convert part of their home equity into tax-free income. This lets seniors easily borrow against the value of their home without giving it up, and makes it easy for seniors or their children to repay the loan when the home is sold. The New Reverse Mortgage Formula helps readers fully understand– and take full advantage of– these helpful loans.

Tom Kelly (Rolling Bay, WA) is a former real estate editor for the Seattle Times. An experienced real estate investor, he currently writes a nationally syndicated column and hosts a nationally syndicated radio program.

TOM KELLY is a former real estate editor for the Seattle Times. He currently writes a nationally syndicated column and hosts a nationally syndicated radio program. He is recognized by the National Reverse Mortgage Lenders Association as a leader in explaining and detailing reverse mortgage products to consumers. With The New Reverse Mortgage Formula, he provides an innovative, commonsense guide for unlocking critical cash for seniors, creating a financial strategy for baby boomers, or building a pool of funds to pay for future healthcare.

About the Author.

Acknowledgments.

Preface.

Introduction.

Chapter 1. Who Are Those Guys?

The Scope of the Reverse Mortgage Market.

Chapter 2. How Much Can I Borrow....and What Will it Cost?

Reverse Mortgage Amounts Tied to Age, Location, Home Value.

Chapter 3. What's on the Menu?

Picking the Right Reverse Mortgage Program.

Chapter 4. The Many Uses of Reverse Mortgage Funds.

Solving the Needs and Wants of Real People in Real Situations.

Chapter 5. Paving the Main Reverse Road.

HUD Has Provided Terrific Testing Grounds.

Chapter 6. Taking an Alternative Route.

Homeowners Who Can't....or Simply Don't Want To.

Chapter 7. Aging in Place and Funding Health Care.

The Prime Target for Reverse Mortgage Money.

Chapter 8. Reverse Mortgage Cash for Modification.

The Changes That Will Allow All Ages to Stay at Home.

Chapter 9. Early Black Eyes: Scanning the History of the Reverse.

Like ARMs, Industry Took its Lumps.

Epilogue: Going Forward in Reverse.

Recommended Readings.

Appendix A: Sample Amortization Schedules and Constant Maturity Indexes.

Appendix B: Reverse Mortgage Lenders, Helpful Forms, and Resources.

Index.