Frequently Asked Questions About Reverse Mortgages

1. What is a reverse mortgage?

Simply, a reverse mortgage is when the loan payments are reversed. A lender makes payments to you. You receive the payments, by converting your property's equity into cash. Mortgage balance grows rather than getting smaller over time.

2. How do I qualify for a reverse mortgage?

There are no credit or income requirements. You may be eligible for a reverse mortgage even if you still owe money on a first or second mortgage. In fact, many people get a reverse mortgage just to pay off a mortgage or line of credit. But, you and anyone else on the title, must be at least 62 years old. Talk to us if someone under 62 is on the title.

3. How much money can I get from a reverse mortgage?

The amount you can receive is based upon your appraised property value, lending limits, and your age. You can do anything you want with the money. Use our reverse mortgage Cash Calculator to see an estimate of how much you can get.

4. Does the bank take my house when I get a reverse mortgage?

Our favorite question. No. You continue to own your home. The lender does not own your home. While the reverse mortgage is outstanding, you continue to own your home. You hold title to it.

5. Can I lose my home with a reverse mortgage?

No. This is another common misconception.

Your home cannot be taken from you as long as you:

• Live in the home as your primary residence.
• Make necessary home repairs.
• Pay your property taxes.

What's more, a reverse mortgage is a non-recourse loan. This means that the lender can only get repayment of the loan from the proceeds of the sale of the property. Your heirs will not be responsible for the repayment of the loan. Simply, you can never owe more than the value of the home regardless of the loan balance. So, if you live longer, you win. The same rule applies if a catastrophe struck and the value of the home is reduced.

6. What are the benefits of a reverse mortgage?

One main benefit is staying in your own home and not moving. Plus, unlike a home equity line or a refinanced mortgage, you don't need income or a certain credit score to qualify, and you don't repay the loan until you leave your property. Unless you want to.

7. Are there different kinds of reverse mortgages?

Yes, and not all reverse mortgages are created equal. Call us and we will take the time to answer all your questions about any reverse mortgage such as, if they fit your needs and how different reverse mortgages compare.

8. What does a reverse mortgage cost? Aren't reverse mortgages expensive?

The types of fees and costs of a reverse mortgage are very similar to those of your forward mortgage, or the mortgage that you used to buy your home originally such as origination, appraisal and other charges. They can be financed as part of your reverse mortgage.

You will notice that reverse mortgages can be more expensive than the forward loan that you got when you first bought your property. That's to compensate the lender for the loan not being immediately repaid, while you are in the house.

9. When do I need to pay back a reverse mortgage?

No payments are due on a reverse mortgage while it is outstanding. The loan becomes due and payable when you cease to occupy your home as a principal residence, fail to make necessary home repairs, or do not pay your property taxes. This can occur if you (the last remaining spouse, in cases of couples) pass away, sell the home, or permanently move out. So, you can pay it back at anytime, but not until you move out, sell the house, or the last applicant passes away.

10. What happens when I pass my home to my heirs?

Your heirs will only have to decide to refinance the debt if they wish to keep the home or sell in order to pay the balance. Actually, a reverse mortgage allows a 'reasonable time' (usually at least 6 months) for your heirs to settle the estate and decide what to do. This is a greater amount of time than traditional mortgages provide and there is no period of default during this time.

11. Does a home in a living trust qualify for a reverse mortgage?

Yes. In most cases. Just provide, or we'll help you get, a copy of the trust, or the certificate of trust.

12. Is there any tax liability for the proceeds from a reverse mortgage?

No. Money received from a reverse mortgage is generally categorized as loan advances and not taxable income. Also, interest expense from the reverse may be tax deductible. You'll want to ask your tax advisor.

13. How does a reverse mortgage affect Social Security, Medicare or pension benefits?

Reverse mortgages generally do not affect these benefits, however programs do vary state by state so you should consult your financial advisor or local senior agency for more information. Look in our local resources links.

14. Will a reverse mortgage affect the future sale of my property?

No, a reverse mortgage will not affect the future sale of your property.

15. What kinds of properties qualify for a reverse mortgage?

Many types of properties do qualify for a reverse mortgage, such as manufactured homes built after June 15, 1976 and multi-unit condos. Call us at 1-800-4MONEY4 (466-6394).

16. Can I use a reverse mortgage to buy a home?

No, you cannot (pending legislation).

17. Can I refinance a reverse mortgage?

Yes! You can.

18. Is it required that I receive counseling before getting a reverse mortgage?

Yes. Counseling from a HUD-approved counseling agency is a requirement. It is designed to protect you and make sure that a reverse mortgage is right for you and your family. We feel its so important that we'll brief you both before and after your counseling session so you get the most from it.

19. Why is a Mortgage Insurance Premium collected?

A premium is collected to protect you, so that you will not owe more money than the current market value of your house (ie. if your home depreciates) and so that you will continue to receive your reverse mortgage funds even if the lender can no longer make payments to you.