Questions & Answers
Most of the answers to common questions are right here. If you have a question your curious about, please ask us, and we’ll respond right here as quickly as possible!
A reverse mortgage is a home loan that converts your home’s equity into cash.
In a reverse mortgage, you receive your home’s equity as payments. These payments can be lump sum, as a line of credit, as monthly installments, or a combination of the two. Repayment for the mortgage is not due until you move or until you pass away.
Reverse mortgages provide you with a new source of income while allowing you to say in your home and continue to own it.
Yes and no. Fees from reverse mortgages including the mortgage origination fee, insurance fees, and closing fees, can be high. However, these can be paid with the proceeds from the mortgage.
Homeowners must be 62 years old or older, and the home must either be owned outright or have a substantial amount of equity on it. Depending on the type of reverse mortgage you apply for, you may have to have reverse mortgage counseling to properly inform you on the responsibilities included in a reverse mortgage.
While you can qualify for a reverse mortgage if you have an existing mortgage, the reverse mortgage is in a first lien position, so the current debt must be paid off with your reverse mortgage funding.
Usually, no. Regular benefits like social security or Medicare benefits will not be affected. However, if you are on Medicaid or SSI, proceeds from a reverse mortgage must be spent within a month after receiving them. Any funds remaining are considered assets and could affect your eligibility to qualify for such benefits.
This generally depends on your age, interest rates, your current mortgage balance, the appraised value of your home, and even the FHA lending limit. Typically, the older you are and the higher your home’s value, the more money you can get out of the reverse mortgage.
In a Single Use Reverse Mortgage, the money you get can only go to one specific purpose which must be approved by the lender. In all other types of reverse mortgages, the proceeds can be used for absolutely anything. Literally…anything you want.
You are charged interest on the proceeds you receive. Payment options determine the whether this interest is fixed or adjustable. This interest is compounded and is paid when repayment for the loan occurs.
In a simple answer, no. A reverse mortgage exists so that the homeowner will not be forced out of their home. However, failure to keep up with property expenses like property taxes, insurance and your home’s maintenance are cause for default on the terms of the loan, and the lender may foreclose on your home. Foreclosure is very rare and not a desirable resolution by the lender.
When you move primary residences, the reverse mortgage becomes due and payable. Applying for a reverse mortgage is only a good idea if you wish to stay in your home for a long period of time.