Frequently Asked Questions

Q. Can my current income influence my ability to get a reverse mortgage?
A. No. Since reverse mortgage borrowers need not make monthly repayments, there are no income qualifications.

Q. Will the bank own my home if I take out a reverse mortgage?
A. You always retain title to your home. It is your responsibility to keep up the property, pay your homeowners insurance and property taxes as well

Q. As I get older and my home appreciates will I be able to refinance my reverse mortgage?
A. Yes. The older you are the more money you will receive. Should your home also appreciate in that time period, you would benefit from that as well

Q. What happens if my loan balance is great than the home value when the loan comes due?
A. A reverse mortgage is a non-recourse loan. This means the only time the mortgage can be accelerated is if you fail to pay your property taxes and homeowners insurance, you fail to keep up the structure of the home, you pass away or you don’t occupy the home for longer than 12 months. Should you sell the home and you owe more than it is worth, the remaining balance is forgiven.

Q. Can a reverse mortgage lender call the loan due if I outlive the loan?
A. No. you don’t need to repay the loan as long as you or another title holder continues to live in the house and keep the taxes and insurance paid and keep up with the property

Q. How much will I qualify for?
A. The amount you can borrow depends on several factors, including your age, the type of reverse mortgage you select, current interest rates, the location of your home, appraised value of your home and FHA's lending limits for your area. Factors increasing the amount you would qualify for include, a lower loan balance and higher appraised value. Additionally, the older you are, the more you qualify for.

Q. How can I use my reverse mortgage proceeds?
A. Any way you want. The various payment terms allow you to use the money for any situation that may arise
 

Q. What are my payment options?
A. Depending on the program you can choose a line of credit, a monthly payment, a lump sum payment or a tenure payment which guarantees a certain monthly stipend for as long as you remain in the home. You can also choose a combination of payments.

Q. I still have an outstanding balance on my home, can I still get a reverse mortgage?
A. Yes. The funds you would receive in the reverse mortgage would be used to pay off whatever existing mortgages you have on the property.

Q. Can I get a reverse mortgage on a vacation home?
A. Absolutely. The amount you qualify for will ordinarily be less than if the reverse mortgage was taken out on your primary property.

Q. What causes the loan to come due?
A. Your reverse mortgage loan becomes due and must be paid in full when one or more of the following conditions occurs: (a) the last surviving borrower passes away or sells the home; (b) all borrowers permanently move out of the home; (c) the last surviving borrower fails to live in the home for 12 consecutive months due to physical or mental illness; (d) you fail to pay property taxes or insurance; (e) you let the property deteriorate, beyond what is considered reasonable wear and tear, and do not correct the problems.

Q. In addition to the principal and interest, what other costs will I pay back when the loan is due?
A. Along with the principal and interest, you will have to pay back the closing costs from when you took out the loan and the monthly servicing costs. Typically your closing costs will include, and origination fee, an appraisal fee, a credit report fee, a flood zone certification fee and settlement charges. The servicing bank will also charge you monthly servicing fees which are the maintenance of distributing your funds monthly.

Q. If I take a reverse mortgage, will I still have an estate that I can leave to my heirs?
A. Yes. When the loan balance is paid off, any remaining equity passes to your estate. Additionally, your non home related assets will not be affected.

Q. Do my heirs need to sell the property to repay the reverse mortgage loan?
A. No. Repayment may be accomplished by refinancing into a traditional loan or paying the balance in cash.

Q. What are the tax consequences of a reverse mortgage?
A. Equity in your home is not considered taxable by the IRS and it will not affect your Social Security or Medicare benefits. If you receive SSI, Medicaid, or other public assistance, your reverse mortgage loan advances are only counted as "liquid assets" if you keep them in an account past the end of the calendar month in which you receive them. You must be careful not to let your total liquid assets become greater than these programs allow. It may be wise to consult your tax advisor on this.

Q. Explain to me why I am required to see a counselor?
A. This is a federally mandated feature of the reverse mortgage process and is designed for your protection. The counselor, who is from an independent government-approved housing counseling agency, explains in detail the pro's and con's of all your reverse mortgage alternatives.