Reverse Mortgages Gaining in Popularity for Retirees
PRYORITY LENDING: Pryority Bank is becoming a leader in reverse mortgage loans throughout greater Tulsa. Ready to assist borrowers in the consumer-friendly program are Cindy Thomason, vice president of mortgage lending and Richard R. Stark, branch president. They can be reached at 369-2424.
Reverse mortgages are becoming popular among many Americans who have retired and continue to own their homes.
Cindy Thomason, vice president of mortgage lending for the First Pryority Bank in Tulsa, explains that a reverse mortgage is a loan that allows seniors to use the equity they have accumulated in their homes over the years to improve their quality of life and knock down the financial barriers to independent living.
By converting equity into income, a reverse mortgage is a way for people to stay in their homes and receive cash for any purpose, whether it’s day-to-day living expenses, home remodeling or repair, paying off existing debt, earning a college degree or traveling the world.
Best of all, homeowners retain their titles and continue living in their homes.
Homeowners who are 62 years and older can qualify and may be eligible even if there is an existing first or second degree mortgage. There is no income qualification.
The size of the reverse mortgage granted depends on the applicant’s age, the type of reverse mortgage sought, the home’s value and interest rates.
For as long as a reverse mortgage is outstanding, no monthly mortgage payments are required. The loan matures when the borrower no longer occupies the home as a primary residence. This typically occurs upon the sale of the home, or if the owner permanently moves or passes away.
Taking a loan to buy a home means borrowing a large sum from a bank and paying down that debt to increase equity and wealth in the home. With a reverse mortgage, the opposite is true. Instead of making payments, a reverse mortgage borrower uses equity to gain income. Throughout the life of the loan, the balance gets larger while the equity gets smaller.
Almost all costs of a reverse mortgage can be financed from the proceeds of the loan and include an origination fee, closing costs, a servicing fee and a mortgage insurance premium.
The benefits include the borrower retaining ownership and occupancy of the home, easy access to equity built in the home, a tax free equity release, no monthly mortgage payments, the interest is tax deductible, the ability to access equity built in the home since its purchase, and the lender has no claim on the borrower’s income or assets other than the value of the home.
A quote from Business Week Online says, “This ingenious product allows you to convert your home equity into cold cash.”
To learn more about the reverse mortgage program at First Pryority Bank, contact Cindy Thomason at 369-2424. The bank is located at 10632 S. Memorial Dr. in Tulsa.
Updated 01-24-2006
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