Questions About Reverse Mortgages- ---CLICK BUTTON BOTTOM OF PAGE FOR WEBSITE AND MORE INFORMATION

LEARN THE TRUTH ABOUT REVERSE MORTGAGES AND ANSWER QUESTIONS ABOUT REVERSE MORTGAGES


Q: What types of homes are eligible for reverse mortgages for seniors  financing?

To qualify for a reverse mortgage, the  home must be your primary residence. 1-4 family residences, condos, and  manufactured homes are all eligible, but  vacation homes, secondary  residences and rental properties are not currently eligible.   


Q: Is it okay if I already have a mortgage on my home?

Yes.  However, any existing mortgages  or liens on your home must be first paid off with the reverse mortgage loan proceeds before you can receive any leftover funds.  In most cases, the  primary reason people take a reverse mortgage is to eliminate their  existing mortgage and the monthly payment associated with it.   


Q: What if the amount of my reverse mortgage is not enough to completely pay off my current mortgage?

Since a reverse mortgage must be a 1st  lien on your property, any existing mortgages and liens on your home  must be paid in full. However, if the proceeds from your reverse  mortgage are not adequate to pay off all current liens on the home, you  can use savings or other sources of cash combined with your reverse  mortgage proceeds to pay off all liens on the property at closing.   


Q: Can I lose my home?

Similar to all other types of home  loans, with a reverse mortgage you retain title and control of your  home.  The reverse mortgage loan is only a lien.  You can remain in your home  for as long as you wish as long as you continue to pay your property  taxes, home insurance, and association dues (if a condo) in a timely  manner.  You also must reasonably maintain the condition of the  property.  These obligations are exactly the same for all traditional  mortgage loans.   


Q: Are there income or credit requirements for reverse mortgages?

As a protection to consumers, the U.S.  Dept. of HUD has recently required borrowers to provide some limited  income and credit information to insure that they are able to continue  paying taxes, insurance, and other property expenses over the long term.   


Q: If I have bad credit, will my reverse mortgage be denied?

Not necessarily.  If your credit  history is not satisfactory, it doesn’t necessarily mean your loan will  be denied, however you may be required to have a mandatory set-aside for  the lender to pay your taxes and insurance.  This set-aside would  reduce the amount of funds available to you directly.   


Q: Are the proceeds from a reverse mortgage taxable as income?

No, because a reverse mortgage is a  loan, you are only borrowing against the equity in your home. This is  not considered income, and therefore it is not taxable as income.  Contact your tax advisor.   


Q: Will my children lose their inheritance?

No.  When you leave the home or sell  it, the reverse mortgage balance is paid in full and the remaining  equity either goes to you or your heirs.   


Q: Will a reverse mortgage affect my Social Security or Medicare benefits?

No.  Reverse mortgages have no effect  on your Social Security or Medicare benefits, however if you are  receiving Medicaid benefits, you may want to consult an elder law  professional before proceeding. A borrower's benefits will not be impacted. HECM loan funds are considered loan proceeds and not income. However, Medicaid and other need-based benefits may possibly be affected. What's more the longer you wait to access Social Security benefits, the more you may receive each month.  A HECM can help delay accessing Social Security and may boost your lifetime retirement income. 

  


Q: Can I get a reverse mortgage if my home is in a living Trust?

Yes.  As long as the living trust meets  certain HUD requirement (nearly all of them do), your home qualifies  for a reverse mortgage.   


Q: Can I use a reverse mortgage to purchase a home?

Yes.  If you are downsizing or  purchasing a new home as your primary residence, a reverse mortgage can  help you finance the purchase.  The down payment would be the difference  between the sales price and the amount available from your reverse  mortgage.   


Q: I know I don’t have to make monthly mortgage payments with a reverse mortgage, but are there other required obligations?

Yes.  You are responsible for paying  your home insurance, property taxes, and any association dues (if a  condo) in a timely manner. You are also required to maintain the  reasonable condition of your home.   


Q: Can I prepay my reverse mortgage?

Yes.  Even though there are no required  payments on a reverse mortgage, you can make full or partial payment  any time you wish with no penalty.   


Q: What is the Mortgage Insurance Premium (MIP)?

The U.S. Dept. of HUD insures reverse  mortgages and for that they charge a fee at closing. For this fee, they  insure that you will always get your funds for the life of the loan, and  that you will never have to pay back more than the value of your home  at the end of the loan. Effective 10/2/2017, borrowers will be charged an upfront MIP of 2% of the appraised value of the home.  Annual MIPs have been also reduced – borrowres wil now be charged an annual MIP of 0.5% of the outstanding mortgage balance- reduced from 1.25%

  


Q: Can I ever owe more than the value of my home?

No.  A reverse mortgage is a  “non-recourse” loan which means that you never have to pay back more  than the value of your home at the time the home is sold. This is true  regardless of your loan balance when you or your heirs sell it. Because  HUD insures reverse mortgages, the government would be responsible to  pay the lender the difference. This is why you pay a Mortgage Insurance  Premium (MIP) to HUD.   


Q: How much do I pay back at the end of the loan?

At the end of the loan, you would pay  back the total of your initial draws and any subsequent draws, plus all  interest and fees accrued during the life of the loan.   


Q: Do I still own my home?

Yes.  Just like all other traditional  loans, you still own your home, and have complete control over it. The  reverse mortgage is only a lien on the home.   


Q: What happens to my home if I die?

At the time the last surviving borrower  dies, the reverse mortgage must be paid in full with all interest and  fees. This can be done by the heirs selling the home or paying off the  reverse mortgage with cash or new financing.  Surviving eligible non-borrowing spouses can stay in the home without foreclosure as long as they comply with the loan terms  


Q: If I die and my heirs wish to sell the home to pay off the reverse mortgage how much time will they have to do so?

If your heirs cannot afford to pay off  the reverse mortgage without selling the home, HUD will give at least 6  months for the sale, and extensions can be granted in certain  circumstances.   


Q: How do I know how much I owe during the term of the loan?

Each month you will receive a monthly  statement which will give you the status of your account including such  things as your outstanding loan balance, periodic interest charges and  fees, and other pertinent information.   


Q: If I choose a credit line, how do I request funds when I need them?

Line of credit draws are typically done  by mailing or by faxing a request form signed by the borrowers. The  funds are commonly wired to the borrowers account within 3-5 days. For  emergencies, there are expedited methods. Talk with your reverse  mortgage servicer.   


Q: Can I change the way I get my money after I close?

Yes.  There are three ways to receive  money from a reverse mortgage, a lump sum, a monthly payment (to you),  or a line of credit. If after you close you wish to receive your funds  in a manner different than the method you chose at closing, you have the  option of switching methods by notifying the servicing lender at any  time.   


Q: If interest keeps accruing on my reverse mortgage over time, doesn’t it become very expensive?

It depends on how you look at it. A  reverse mortgage has no monthly payments, so as interest and fees  accrue, your loan balance goes up over time, and your savings account  stays the same. With a traditional loan, your loan balance would not go  up, but you would be making monthly payments, so your savings account  would be going down over time.   


Q: If my spouse is not 62 years old yet, can we qualify jointly for a reverse mortgage?

No.  All borrowers  must be at least 62 years old at the time of closing. However, in  certain circumstances under new HUD rules, spouses who are not yet 62  may still have rights to stay in the home for their lifetimes even if  the borrower spouse passes away or leaves the home.  Loans are available to borrowers with a non-borrowing spouse under the age of 62.          

Surviving eligible non-borrowing spouses can stay in the home without foreclosure as long as they comply with the loan terms 


Non-borrowing spouses can be on title and be under 62 reverse mortgages for seniors


Find out more...SENIOR REVERSE MORTGAGE GROUP, INC.