The Dawn Rocks

A reverse mortgage can be a useful tool in helping seniors to maintain their independence and stay in their homes as long as possible after retirement. But, a reverse mortgage is not without limitations. People with a high value home may be shocked at how little they can qualify for in a reverse mortgage because of the loan limits with FHA.

To fill this void in the market, a relatively new product called equity sharing has been designed to help those that don’t qualify for a reverse mortgages. Even if you do qualify for a reverse mortgage, equity sharing can be an alternative that is not a mortgage and does not accrue interest. Try to use a reverse mortgage calculator.

With equity sharing, the property owner (age 65 to 85) agrees to share the future appreciation of the property with the financial institution in exchange for cash today. The home owner is allowed to keep 100% of the equity based on current appraised value. Then, going forward, the home owner will split the appreciation 50/50 with the financial institution. As compared to a reverse mortgage, equity sharing does not have an interest rate accruing, it is not recorded as a mortgage on the property, and it can be used on properties other than the owner’s primary residence.

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