(NAPSA)—If we haven’t heard many heart-wrenchingstories of seniors being thrown out of their homes amid the current wave of foreclosures, it may be because of an option uniquely tailored to Social Security and Medicare. What’s more, the FHA guarantees both the terms of the loan and that borrowers will never owe more than their homes are worth. That applies even if the property’s value has fallen should they move or pass away. The Svecs Of Chicago Rich and Brigitte Svec of suburban Chicago had lived in their them: reverse mortgages. A reverse mortgage allows homeowners age 62 and older to tap into the equity they've built in their homes. But instead of borrowing against a home’s value and owing monthly checks to a bank— which got countless people, of all ages, in trouble for using their home for 42 years, yet were homes as “piggy banks” to finance lavish lifestyles they couldn’t really afford—they make no mortgage paymentsfor as long as they or their spouse remain in residence, and are eligible to receive as much as about $260,000 through a program insured by the Federal Housing Administration. Manyof the 10,000 seniors now taking out such loans each month do so because they’re no longer able to afford the taxes and insurance on their properties. And since the money can also be used to cover basic living expenses at a time when manyare barely eking by on Social Security, numerous experts view reverse mortgages as nothing short of a “financial lifeline.” “Reverse mortgages help keep senior homeownersin their homes while capitalizing on their equity,” explains Jeff Lewis, chairman of Generation Mortgage Company, a reverse mortgage lender that regularly works with the FHA. “Theyre discovering how they can be used for any purpose—to supplement retirement income, help fund health care, pay for home modifications and even secure a cash reserve.” Reverse mortgages can be a smart and affordable way for seniors to tap into the value of their house. How It Works While the FHA’s lending limit is currently $417,000, the amount you can borrow is based on things like your age, interest rates, the appraised value of your home, and the amount of equity you have in your home. That said, say youre age 70, your home is worth $400,000 and that you ownit free and clear. An FHA reverse mortgage loan, through an approved lender, will give you approximately $254,000. And if you don’t own your house outright? In that case, the lender would calculate the amount of equity in your home and generate a commensurate loan that would be used to pay off the remainder of your original mortgage—still often leaving extra cash to spare. The Internal Revenue Service doesn’t view this as taxable income and it generally doesn’t affect such federal benefits as recently faced with the very real possibility of foreclosure. The problem: Even though their mortgage totaled just $155,000, their home was worth more than $500,000. Concerned for the couple’s future, an executive at their bank contacted a reverse mortgage pro- fessional at Generation Mortgage, who showed them how they could pay off their mortgage—as well as a separate line of credit—andstill have access to another $80,000 in funds. The entire process was completed within the 30-day foreclosure extension granted by the Svec’s mortgage holder. “It was the first night in a long time that we were able to sleep soundly without worry,” Rich Svec recalls. Perhaps adding to their ease: Reverse mortgages contain none of the prepayment penalties associated with variable annuities, long-term certificates of deposit or certain types of lines of credit, says Lewis. “You or your heirs simply pay back the borrowed amount when you sell and leave the home.” Generation Mortgage offers a variety of reverse mortgage loans. For a free DVD information packet, call (866) 733-6089 or visit the Web site www.generationmortgage.com.
