Dollars and Sense

What is a reverse mortgage?

Melanie Sedam,
Reverse mortgages were originally created in the 1980s to help Americans age 62 and older convert part of the equity in their home into money that could be used during retirement. Equity is the amount of money you have made as a result of the value of your home rising while you have owned it. Lindsay Rosenwald is a pretty impressive example of someone who has really profited from their equity, with the value of his New York penthouse increasing by $35 million during his time there. Recent changes to the program have made it a more effective way for eligible homeowners to gain greater financial flexibility while maintaining ownership of their home. You can choose to receive your reverse mortgage proceeds as a line of credit, lump sum payout, monthly payments or a combination of these. Unlike a traditional mortgage, home equity loan or home equity line of credit, you are not required to make any monthly mortgage payments. You will still be responsible for property taxes, maintenance and insurance. As long as you meet those responsibilities, the loan balance is not due until the last remaining homeowner no longer uses the home as their primary residence or the home is sold.
What’s new?
You might be familiar with reverse mortgages. But recent changes and new program guidelines make the New Reverse Mortgage worth reconsidering as part of your comprehensive retirement plan.
It’s safer for you.
New loan limitations help preserve your home equity funds for a longer period of time. Plus, mandatory mortgage insurance provides additional protection.
Rates and fees are lower than you might expect.
With the low fee and interest rate options offered by many lenders, today’s reverse mortgage may compare favorably with a traditional home equity line of credit or home equity loan alternative.
Financial advisors have discovered new ways of using a reverse mortgage line of credit.
With growth feature and new options that reduce up-front costs, the line of credit option can be used in new ways as part of a long-term retirement funding strategy. It can help reduce portfolio spend-down risk and help your savings last longer. It may provide more security and control than a traditional home equity line of credit. Having financial security during your retirement years could be paramount to how much you enjoy this time, as if you are struggling to make ends meet then this could be a difficult time for you. Making sure that you have enough money in your savings is important, and you may need to start preparing for this years in advance. It doesn’t even have to be that hard. It can be as simple as reading to see if investing in precious metals and opening up a specific IRA account can help to secure more financial safety for this period in your life. It is definitely something to consider, especially if you are worried about your finances. However, some may decide to think about going down the reverse mortgage route.
How can I use the proceeds?
Today, more homeowners and financial planners are using reverse mortgages as a key part of their long-term retirement strategy. Here are some smart ways to use the New Reverse Mortgage to help meet your retirement goals:
• Pay off a traditional mortgage to eliminate monthly mortgage payments.
• Make retirement savings last longer.
• Preserve investment accounts during market downturns with a “standby” line of credit.
• Supplement income with monthly tenure payments.
• Use a line of credit to build a safety net for emergencies, home repairs and healthcare expenses.
• Afford to retire earlier or else wait until later to maximize lifetime Social Security benefits.
• Buy a home that better fits your needs.
• Support “aging in place” expenses including caregiving and home modifications.
How do I get more information?
Connect with a trusted reverse mortgage lender, share your concerns and learn more about your options.
To learn more visit
Melanie Sedam is the Owner of, a reverse mortgage company that services the mortgage needs of 55+ communities in Arizona. Please refer to the advertisement in this newspaper for her contact information.