Hawaii Reverse Mortgages Explained

A reverse mortgage is a loan against the home available only to those 62 or over who have adequate equity. It can be used on either a single family residence or condominium (as long as the condo meets FHA approval). It allows the senior homeowner to tap into the equity of their home without having to sell and move from the comfort and safety of their current home.

How is a Reverse Mortgage Different to Other Loans?

What sets a Hawaii reverse mortgage apart from other types of residential loans is the homeowner can access a portion of the equity to use however they choose without making a monthly "mortgage" payment for as long as they remain living in the home as their primary residence. Maintenance, taxes and insurance must still be paid directly by the homeowner (failure to pay these could result in foreclosure procedures being started). In addition, the senior homeowner can choose one of many four ways in which to receive their cash equity: As a (tax-free) lump sum of cash, as a line of credit, as a monthly payment paid to the "homeowner" (instead of making a mortgage payment) or as a combination of these.

What are the Advantages to a Hawaii Reverse Mortgage?

One of the best things about a Hawaii reverse mortgage is that there is no monthly mortgage repayment required, the balance and accrued interest is only due and repaid when the real estate is sold, the last remaining homeowner passes away or leaves the property for a period in excess of a year as in the case of moving into a permanent care facility. The heirs have the option to either refinance the loan into their name or sell the home and keep any remaining equity.

What can the Cash be Used for?

Some seniors use the money to extend their retirement/pension funds, remodel the home, visit the grandchildren or a much needed vacation. There are no restriction on how a person can spend the money they receive from a reverse mortgage.

Are there any Downsides?

Yes, as in all things there are pros and cons. One of the downsides is that there will be less remaining equity to pass on to the children or heirs. Most children want their parents to live comfortably in their remaining years and aren't concerned with their inheritance; however, a reverse mortgage is something that should be discussed with all family members that might be impacted. Also, if the money is not used wisely, it will be gone if it was part of a long-term-care plan or if such a plan has not been well sought it. It's always good to consult with your financial planner.

In Conclusion

For more information and for a Free, No-Obligation quote, contact Daniel Nicolosi at Harbor Financial Group – Your Aloha Mortgage Solution. You can reach him directly at (808) 799-8218 on Oahu; or Toll Free at 888-423-2468 on the Neighbor Islands.

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Hawaii Reverse Mortgage

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