Reverse Mortgage Frequently Asked Questions

What is a reverse mortgage?

A reverse mortgage is a loan against your house that enables you to change a part of your houses equity into tax-exempt revenue. The loan doesn't become owed for as long as you reside in your house. Furthermore, it doesn't become owed till the final borrower departs the house. Plainly stated, a reverse mortgage is a loan that you do not need to pay back till you no longer reside in your house.

So what is the catch? Why would somebody provide such a deal?

There is no catch. The lender provides the loan based on your age, the sum of equity in the house, your localization, rates of interest, and the type of reverse mortgage you acquire. The cash is repaid with interest once the final borrower deceases, permanently moves away from the home, or sells the home. It is quite often the proceeds from the sale of the home which fulfill the loan responsibility.

So I can get a part of the value of the home, still own the home, not have to make any payments, and still reside in the home?

YES! If you meet the criteria, you will be able to.

What are the requirements? Who can get a reverse mortgage?

First, you must be sixty-two years old or older. Second, the house must be your primary residence. Additionally, if you have an existing mortgage balance, this will have to be fulfilled by the reverse mortgage as stated below.

What if my home Is not paid off, can I still qualify for a reverse mortgage?

The debt has to be satisfied with the proceeds of the reverse mortgage. Yes, the reverse mortgage may be used to pay off any left over debt you presently have.

How am I able to use the cash from the reverse mortgage?

You can utilise the cash however you decide. You are able to pay current debts, make repairs or improvements to your house, pay for healthcare expenses, assist your children or grandchildren, or simply have enough cash not to worry.

How is this different from a home equity loan?

A home equity loan becomes smaller over time, while a reverse mortgage becomes bigger over time. There are specific dates a home equity loan or HELOC has to be paid back. A reverse mortgage becomes due at death or permanent relocation from the home.

Does the lender own the home?

NO! You own your home.

Can my home ever be taken away from me?

NO! Your house can't be taken from you even if you live longer than your "life expectancy." You can also never owe more than the house is worth.

Can I still pass the home on to my successors?

YES! You may pass the home along to successors if the loan has been repaid. The sum of money your house is worth above what you owe at the time of death goes into your estate.

Does it cost anything out-of-pocket to get a reverse mortgage?

These costs are typically restricted to a nominal application fee and a low-cost credit check. These fees vary, so it is best to inquire!

What forms of reverse mortgages are there?

The most common kind of reverse mortgage is a federally insured reverse mortgage. It is called a Home Equity Conversion Mortgage (HECM). These loans are insured by the U.S. Department of Housing and Urban Development (HUD). There are additional forms of reverse mortgages known as proprietary reverse mortgages. It is most beneficial to ask loan specialists personally about the different forms of reverse mortgages.

How do I get the cash?

The various ways to obtain your cash from a reverse mortgage are:

• You will be able to get the cash all at once as a lump sum.
• You will be able to receive monthly payments.
• You will be able to take the money as needed.
• You could select a combination of any of the above.

Will my benefits be cut by this program?

A reverse mortgage doesn't impact your Social Security, Medicare, or pension benefits. Nevertheless, SSDI and Medicaid may be another story. It is usually possible to structure the loan in a way that your benefits continue intact. It's an important question to ask your loan originator. Additionally, prior to the loan being issued, you'll meet briefly with an impartial, government sanctioned counselor. It's also wise to confer with an older law attorney with these questions. The appropriate government agencies may also be helpful.

Whats the next step?

You have to be equipped with all the facts before contracting a reverse mortgage. The most beneficial way to do this is by talking with approved, polite, courteous, and responsive lenders. The easiest way to discover the lender for you is by clicking here.

What ought I do to prepare to talk with a reverse mortgage specialist?

Know some common data about your home and know the answer to the question "Why do you desire a reverse mortgage," or "Why do you want to know more about a reverse mortgage?" Ask the lender about his/her organization. Do they specialize in reverse mortgages? What is the fee structure? Are they nationally recognized and/or do they do work with a top financer?

Should I use an "estate planning service" to discover a reverse mortgage?

NO! HUD does NOT advocate employing an estate planning service, or any service that charges a fee just for referring a borrower to a lender!