According to the Wisconsin REALTORS Association the median home price in Wisconsin was $164,900 in 2016. For many, that might seem cheap. However, if you’re a retiree that’s earning just social security income, that could make the budget pretty tight. After all, the average monthly social security benefit amount is just $1360.00 (according to Social Security Administration). Considering the average monthly spend per person on food is $459 ($283 for food at home and $172 for food out), that doesn’t leave a lot of extra money. If someone still had a mortgage payment, finances would be pretty tight. A reverse mortgage would actually eliminate your monthly mortgage payments, thus freeing up any cash that was devoted towards paying your mortgage.
Wisconsin Reverse Mortgage Basics
Put very simply, a reverse mortgage loan works just like a regular loan, but has 3 tiny differences.
- The first difference is that this type of loan does not require any monthly mortgage payments. This is applicable for as long as you live and as long as you remain in your home. It is just a loan and you do still own your home, so you’ll need to pay taxes and maintain insurance.
- One of the other two differences is that there is an age requirement. You have to be at least age 62 to qualify.
- The third difference is that there is an equity requirement for a reverse mortgage in Wisconsin. If you are age 62, you can borrower 52.4% of the appraised value of your home. The scale tops out at age 90. A 90 year old would be able to borrow up to 75% of the value of their home. The amount you get goes up just a tiny bit with each passing year (from age 62-90) until it caps out at age 90.
WI Reverse Mortgage Pros and Cons at a Glance
- No monthly payment (you’re still responsible for paying property taxes and insurance though).
- You retain title and ownership of your home.
- A reverse mortgage is easier to qualify for than a regular mortgage.
- Since the money you receive is loan proceeds (opposed to income), the money should be income tax free. However, you may want to consult your tax professional.
- The home is the only asset that can be touched to repay the loan. Hence, no other assets can be touched for repayment. This is true even if the housing market crashes and you owe more than your home is worth.
- The loan is insured by FHA / HUD.
- There are numerous methods of receiving the reverse mortgage funds.
- You can fund a reverse mortgage if your home is in a trust.
Now that we covered the Wisconsin reverse mortgage pros, here are some reverse mortgage cons to consider:
- A reverse mortgage might have an affect on some types of government assistance (like food stamps).
- The reverse mortgage fees can sometimes be higher than a traditional loan.
- Sometimes the interest rates is an adjustable interest rate.
- The loan balance goes up since you don’t make payments.
***This list of reverse mortgage pros and cons should not be considered and all inclusive list.
WI Reverse Mortgage Counselors
Another positive about a reverse mortgage in Wisconsin is that it requires counseling. Some people view this step as a negative, extra step, but it is really is for your benefit. It’s a way of ensuring you know all the basics of reverse mortgage and a way of ensuring you don’t get into a contract that might not be best suited for you. Think about it. Your loan officer get’s paid to do this type of loan for you. Conversely, the reverse mortgage counselor does not benefit if you do a reverse mortgage. They get their fee for doing the counseling and that’s it. They are meant to be a neutral 3rd party.
Below is a list of Reverse Mortgage Counselors in the state of Wisconsin as provided by the HUD portal as of 06/05/2017.
|Name||Agency ID||Address||Phone||Web Site|
|HOUSING RESOURCES, INCORPORATED||81166||7830 W BURLEIGH ST
MILWAUKEE, WI 53222-4915
|NEIGHBORHOOD HOUSING SERVICES OF SW WISCONSIN||80633||125 E SEMINARY ST
RICHLAND CENTER, WI 53581-2354
|NEIGHBORWORKS BLACKHAWK REGION – NHS OF BELOIT, INC.||80927||520 W GRAND AVE
BELOIT, WI 53511-5311
|NEIGHBORWORKS GREEN BAY||80929||437 S JACKSON ST
GREEN BAY, WI 54301-3909
You also have the option of doing your counseling on the phone. Your loan specialist will be able to provide you with a list of phone counselors.
At the end of the day, a reverse mortgage is not right for everyone. However, it’s has been a smart choice for many retiree’s.
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www.ReverseMortgageLoanAdvisors.com Is not a lender, bank, or mortgage broker, nor is it affiliated with HUD or FHA. Reverse Mortgage Loan Advisors is simply a website designed to offer information about the FHA insured reverse mortgage program. However, the owner of the site is licensed as a reverse mortgage specialist in several states. Anyone that inquires and requests more information may be contacted by the owner of this site. If the owner of this site is not licensed to conduct business in the state you reside, one of our affiliates will contact you instead.