WHITMAN, MA, ISSUED JULY 24, 2007…Mutual Bank, a leading community bank with eight full service offices in Southeastern Massachusetts and Cape Cod, today announced that it has introduced a new reverse mortgage program.
"We're excited to enter the reverse mortgage field at this particular time", said William J. Morse, Mutual Bank President, in making the announcement today. "We've watched the product evolve in the industry to the point where we believe we can now offer a versatile program with all the proper safeguards. And it comes just at a time when the demand for post-retirement financial solutions is growing."
The reverse mortgage is a loan that allows older homeowners to convert part of the equity in their homes into tax-free income. Its primary design is to strengthen a senior's financial independence by providing funds without having to sell the home, give up title, or take on a new monthly mortgage payment.
Noting the growing number of residents of Southeastern Massachusetts and Cape Cod who are over the age of 62, Morse said that this program is one that should have significant appeal.
To be eligible for a reverse mortgage, homeowners must be at least 62 years of age, have significant equity in the homes that they own, and live in these homes. No income verification is required, nor is there credit qualification.
Like a traditional mortgage, the reverse mortgage is secured by the equity in the house; unlike other mortgages, it requires no monthly payments. It is due and payable when the property owner either sells the property, dies or permanently moves elsewhere.
Primary residences are eligible; typically, vacation or secondary residences, mobile or manufactured homes, or rental properties and/or homes on leased land do not qualify.
“This is an excellent program for people over the age of 62 for a number of reasons,” Morse said, adding, “There is a misconception that the lender takes title to the property, and that is not the case. A reverse mortgage is simply a means for someone to tap into the considerable equity in his/her home and use the funds for living expenses or any purpose they wish. There are a number of different ways that the borrower can access funds; the most common is to set up a program of monthly cash advances.”
Typically, borrowers use reverse mortgage funds to pay off an existing mortgage, purchase long term health care, travel or take a vacation, purchase a car or RV, make needed home improvements, cover routine living expenses, or to establish a line of credit for emergencies.
Features of the reverse mortgage include:
• Choice of lump sum, line of credit, monthly payments, or combination
• Retained ownership of home
• No monthly payments
• No impact on Social Security or Medicare benefits
• No restrictions on how to use the funds
• No income taxes on loan proceeds
• No prepayment penalty
• A borrower will never owe more than the value of the house
Reverse mortgages can be taken out even if there is a conventional mortgage still on the residence, but existing mortgages must be paid off at the time of the closing.
Morse said, “For people who have owned their homes for many years and have built up considerable equity, this may be the way for them to achieve some of the goals they haven’t considered – whether it’s taking the vacation of a lifetime, buying a boat, or simply having an additional $300 or $400 per month to spend.” He added, “Whatever the financial need, the reverse mortgage is applicable to a diverse range of circumstances.
The owner is required to maintain property taxes, property insurance and notify the lender if he/she will be away from the property for an extended period.
Morse said that Mutual Bank will host seminars on the reverse mortgage program for interested parties. In the meantime, anyone with questions is encouraged to call 781-447-4488.
