Questions

Reverse Mortgage FAQs – Frequently Asked Questions
A list of Reverse Mortgage FAQs – Frequently Asked Questions follows:

– – – – DEFINITION and QUALIFYING REVERSE MORTGAGE FAQs – – – –

What is a reverse mortgage? What is a HECM?
A reverse mortgage loan enables homeowners who are 62 or older to convert a portion of the equity in their home into a variety of cash out options that are generally tax free. A HUD/FHA HECM is the government backed version of a reverse mortgage and comprises over 95% of all reverse mortgages taken out by seniors today.

How do I qualify for a reverse mortgage?
Easy. Qualifying for a reverse mortgage is relatively simple. Factors include: the value of the home minus any mortgage balance or liens, the age of the youngest borrower (must be 62 or older), and the current interest rates. A calculation is then made to determine how much money the borrower(s) qualifies for. More info on Qualifying (click here).

Is my income or credit history a factor?
No. Credit score, credit history or income is never considered when qualifying for a reverse mortgage.

Are all homes are eligible for a reverse mortgage? Condos?
No. Eligible properties for a reverse mortgage include 1-4 unit homes, FHA approved condominiums and planned unit developments that are the borrower(s) primary residence. Mobile homes and cooperatives are usually not eligible for a reverse mortgage. Not all Condos and PUDS will qualify because they must meet certain guidelines for the development to be approved by FHA. Use the “contact us” form below for a referral to a lender partner who can help get a condo development approved by FHA.

– – – – MONEY RECEIVED and COST REVERSE MORTGAGE FAQs – – – –

How much money can I receive?
The amount of reverse mortgage money that is available depends on several factors including the age of the youngest borrower, the reverse mortgage program selected, the current interest rates, the appraised value of the home and the FHA lending limits. Generally older borrowers will get more money. Use our Calculators (click here).

What kinds of payments are available?
The borrower(s) can receive the money from a reverse mortgage loan in a single lump-sum payment, receive equal monthly payments for as long as the borrower(s) live in the home or for a fixed period of time, or in the form of a credit line. The borrower(s) can also choose a combination of payment types to meet their needs. Use our Calculators (click here).

What are the costs and fees for a reverse mortgage?
The costs and fees for a reverse mortgage are constantly changing. In some cases they can be very high. Today there is a lot of competition in the market place so you should be able to negotiate lower costs and fees. More info on Negotiation (click here).

– – – TAXES and BENEFITS REVERSE MORTGAGE FAQs – – – – –

Are there any tax consequences if I get a reverse mortgage?
Probably Not. The Internal Revenue Service (IRS) considers reverse mortgage proceeds to be a loan advance and not income. Loan advances are generally not taxable but consult your tax advisor to check.

Will a reverse mortgage affect my government benefits?
Maybe. Money received from a reverse mortgage generally does not affect Social Security or Medicare benefits. If you receive benefits from SSI, Medicaid, or state based public assistance programs (like Medi-cal in California), then they may be affected. Please consult Social Security, Medicare or a financial advisor to determine how reverse mortgage money and payments may affect your government benefits.

– – – – – PROGRAM FEATURES REVERSE MORTGAGE FAQs – – – – –

Do I still own my home?
Yes. Your name will remain on the deed until your home is sold or your estate settles. A mortgage however will be placed on the property like with any real estate secured loan.

Can the lender take my home away?
No. The lender cannot take your home no matter how long you live there provided you continue to use the home as your primary residence, keep it in a good state of repair, pay all property taxes and keep insurance coverage current.

When is a reverse mortgage loan due?
A reverse mortgage loan becomes due and payable when one or more of the following happens: (1) The last borrower passes away or sells the house (2) The last borrower fails to live in the home for 12 consecutive months due to illness (nursing home for example) (3) The borrower(s) move out of the house permanently (4) The borrower(s) fail to pay property taxes or insurance (5) The borrower(s) allow the property to deteriorate and do not correct the problems

If I get a reverse mortgage, will there be anything left for my heirs?
If there is equity in the home when the last borrower passes heirs can pay off the existing reverse mortgage balance with other available funds or obtain a traditional mortgage to pay off the balance and not sell the home. If they sell the home they can pay off the reverse mortgage balance and keep any remaining money.

What kinds of reverse mortgage programs are available?
There are several reverse mortgage programs that are backed by the government. These are also known as Home Equity Conversion Mortgages (HECMs) More Reverse Mortgage FAQs on Programs (Click here)

Are the interest rates fixed or variable?
Both. There are variable and fixed rate options for reverse mortgages. The type of rate you choose affects the amount of money you receive.

Can I get a reverse mortgage on a second home?
No. Sorry. But you can use a reverse mortgage to buy a retirement home that you move into. More info on Purchasing (click here).

Do I have to meet with a counselor before getting a reverse mortgage?
Yes. This is a government requirement that is designed to make sure you understand all the features of the program and have looked at alternatives. More info on Counseling (click here).