FAQ

Frequently Asked Questions

  • What Is a HECM Reverse Mortgage?
  • A HECM reverse mortgage is a U.S. Government-regulated and FHA-insured home loan that allows seniors age 62 and older to access a portion of their available homes equity and use the proceeds however they choose.

    You’ll retain title to your home and there are no required monthly mortgage payments as long as you continue to live in your home as your primary residence or until a maturity event occurs. See details below “Can I Lose My Home with a Reverse Mortgage?

  • Who Qualifies for a Reverse Mortgage?
    1. Borrowers age 62 and older.
    2. You must own the home as your principal place of residence, or
    3. You may purchase a home as your principal place of residence.
    4. You must have equity in your home.

    In a nut shell: If you are 62 years or older, own your home as a principal residence and have sufficient equity, you are a candidate for a reverse mortgage. If you have any questions regarding reverse mortgage qualifications please contact a Reverse Mortgage Lender.

  • Do I Need Good Credit or Income?
    1. NO – There are NO Income & NO Credit requirements for an FHA reverse mortgage.
    2. Income, Savings or Cash Reserves are NOT a determining factor. You can owe tens of thousands of dollars on your credit cards…It is NOT a factor.
  • Are my Social Security and Medicare benefits affected?
  • NO – Social Security & Medicare benefits are not affected: however, if you receive Medicaid, any reverse mortgage proceeds that you take must be used immediately. Funds that you retain are counted as assets and could impact Medicaid eligibility. We recommend that you consult your financial adviser or a reverse mortgage expert to review your specific situation.
  • How Much Can I Expect to Get From My Home?
  • The dollar amount you can borrow will depend on these primary factors:

    1. The age of the youngest borrower. [The older the better in this case]
    2. The appraised value or purchase price of your home and remaining equity.
    3. The FHA mortgage limits for the location of your home.
    4. Current established FHA interest rates for reverse mortgages.
    5. The Mortgage Insurance Premium (MIP) option you choose helps determine the amount of cash that will be available.
  • What Payment Options Are Available?
  • There are 5 options available that a Reverse Mortgage Lender will offer you.

    1. Lump Sum – One single payment at the closing.
    2. Term – Fixed monthly payments that are set for period of time.
    3. Line of Credit – Installments or unscheduled payments, at any time and in amounts of your choosing, until the credit line is gone.
    4. Tenure – Equal monthly installments as long as at least one borrower lives and occupies the home as a principal place of residence.
    5. Modified Tenure – A combination of line of credit with monthly payments for as long as you remain in the home.
  • Are My Reverse Mortgage Funds Resticted?
  • Generally speaking, you can use your reverse mortgage funds for just about anything you want, without a taxable liability.

    1. Pay off existing home mortgages [required as part of a Reverse Mortgage]
    2. Pay Medical bills
    3. Pay off credit cards
    4. Pay Home repairs and improvements
    5. Property taxes – HOA dues
    6. Take a monthly income for life
    7. Travel, Gifts, Grandchildren, Enjoy a new quality of LIFE
  • Can I Lose My Home with a Reverse Mortgage?
    1. Not as long as you are living in your home as your primary residence, continue to pay the property taxes, hazard insurance, HOA dues [if applicable] and keep your home maintained. That’s all that is required!

      In 1989, Congress made significant changes to the Reverse Mortgage industry and added the safety and promise that borrowers would not lose their homes to unscrupulous lenders. Remember, you and your co-borrower [if applicable] own your home. Not the bank or anyone else. It’s your responsibility to continue paying the property taxes, hazard insurance, HOA dues [if applicable] and keep things fixed up.

      The major difference between a Reverse Mortgage and a “Traditional” mortgage is that with a reverse mortgage, the loan does NOT have a required monthly mortgage payment, so you can never fall behind in payments. The payment is deferred until you move, sell or take your last breath. If you decide to sell, you will never be responsible to pay more than your home sells for. Your FHA-insurance premiums guarantee that in writing.

  • What Can Trigger A Reverse Mortgage To Be Due and Payable?
  • There are a few requirements, just like any mortgage.

    1. You must continue to make payments on your property taxes and hazard insurance.
    2. You must maintain your property and not allow it to deteriorate.
    3. If you sell or permanently move to another residence, your reverse mortgage will be due and payable.
    4. If you do not live in your home for a period of 12 months in a row.
    5. An example would be if you were the only borrower and had to live in a nursing facility for 12 months or longer. *If there was a co-borrower still living in your home, this would qualify for the 12 month occupancy and the reverse mortgage would not be due and payable. At least one of the borrowers would have to be living in the home.
  • Can I Still Leave My Estate to My Heirs?
  • Yes. When you pass away or sell your home, you or your estate will repay your loan from the reverse mortgage plus any applicable fees. The remaining equity in your home belongs to you or your heirs.
  • What Kind of Reverse Mortgages Are Available?
    1. CONFORMING REVERSE MORTGAGES – The Home Equity Conversion Mortgage [HECM] is the only reverse mortgage insured by the federal government. HECM mortgages are insured by the Federal Housing Administration [FHA], which is part of the U.S. Department of Housing and Urban Development [HUD].
    2. Home Keeper Reverse Mortgages – In 1996 the Federal National Mortgage Association [FannieMae] created the Home Keeper Reverse Mortgage.
    3. JUMBO REVERSE MORTGAGES – These reverse mortgages are available from private Reverse Mortgage Lenders. Terms may vary depending on the lender, and they are not regulated the same as the HECM reverse mortgage. In many cases a JUMBO REVERSE MORTGAGE serves as a great retirement planning tool. It is recommended that you see your tax adviser before applying for a JUMBO REVERSE MORTGAGE.
  • Is the Reverse Mortgage Application Process Difficult?
  • The process is easy and painless. After an initial interview, [usually over the phone] your reverse mortgage specialist can determine if you qualify.

    Based upon the information you provide the lender, they can give you a very good idea of how much you would qualify to receive. Your lender can tell you the costs involved and the time frame in which a reverse mortgage can be expected to fund. The three most important factors regarding the process that will make it streamline are:

    1. If you know your homes value and it matches the appraiser’s report.
    2. If there are no major repairs needed, such as new roof or insect infestation.
    3. Every borrower MUST receive a Counseling Certificate from a HUD approved Reverse Mortgage Counselor before FHA will insure your reverse mortgage. Please schedule your appointment as soon as possible.

      Remember, an FHA-insured reverse mortgage is Government-regulated and the loan process is designed to help you understand each and every aspect along the way. It is possibly the best financial tool available to a senior, so it stands to reason that every precaution is taken to protect your interest.

      When you contact your lender, a trained loan specialists should guide you through the reverse mortgage process.

  • What Fees are Associated With a Reverse Mortgage?
  • Most of the same expenses that apply to a traditional mortgage will apply to a reverse mortgage.

    For example, borrowers can expect to pay an origination fee, an appraisal fee, escrow fees, title insurance, notary fees, and mortgage insurance premium [MIP]. MIP is standard with any FHA-insured mortgage including traditional and reverse mortgages.

    Some fees associated with reverse mortgages are regulated by the U.S. Government and are capped. Often times fees can be included into the new loan.

    The only out of pocket expenses the borrower must pay during the actual process is the counseling fee and possibly an appraisers fee. The counseling fee is approximately $125 and can vary by state and counselor. Sometimes the counseling can be FREE, call one of our experts to find out how.

    A reverse mortgage expert will be able to answer any additional questions you have.

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