We've Got Answers To Your Reverse Mortgage Questions
If you are 62 years or older, a reverse mortgage can help you borrow against your home's equity to access funds that can give you greater financial flexibility.
Here are answers to some common questions that can help you decide if a reverse mortgage is right for you. If you'd like to learn more, please conttact me for expert guidance that's tailored to your individual needs and plans.
Here are answers to some common questions that can help you decide if a reverse mortgage is right for you. If you'd like to learn more, please conttact me for expert guidance that's tailored to your individual needs and plans.
What is a reverse mortgage ?
A reverse mortgage is a home-secured loan that's exclusively for homeowners and home buyers age 62 and older. It allows you to convert some of the equity in your home into funds you can use as you choose, while you continue to own and live in your home. Most reverse mortgages are Home Equity Conversion Mortgages (HECMs), which are insured by the Federal Housing Administration (FHA).
What are the basic requirements ?
You may be eligible for a reverse mortgage if you are at least 62 years old, own and have sufficient equity in your home, and live in the home as your primary residence.
WHAT IF I STILL OWE MONEY ON A FIRST OR SECOND MORTGAGE ?
You may still be eligible. Proceeds from your reverse mortgage would first be used to pay off any existing mortgage(s). This means the balance of your existing mortgage(s) will be added to the balance of your reverse mortgage.
HOW MUCH MONEY CAN I GET ?
The specific amount depends on several factors, including your age, the type of reverse mortgage you select, the value of your home, prevailing interest rates and FHA lending limits.
HOW IS A REVERSE MORTGAGE DIFFERENT FROM A HOME EQUITY LINE OF CREDIT ?
A reverse mortgage offers certain advantages that provide greater flexibility and financial control:
- With a reverse mortgage line of credit, the unused amount in your credit line actually grows over time-giving you access to more available funds
- No monthly principal and interest payments are required, and there is not a predefined loan maturity date. You can choose to pay down the loan at any time, or defer repayment. (As with any home-secured loan, you must keep current with property taxes, insurance and maintenance for the loan to remain in good standing).
- A reverse mortgage can't be canceled or reduced, as long as you meet your loan obligations and live in the home as your primary residence-so it will be there when you need it.
- With an FHA-insured reverse mortgage, you are not responsible to pay the difference if the loan balance ever exceeds the value of your home when the loan becomes due. This is known as the non-recourse feature.
HOW CAN I RECEIVE THE FUNDS FROM A REVERSE MORTGAGE ?
You can take your funds as a lump sum, line of credit, monthly advances, or any combination of these.
WILL A REVERSE MORTGAGE AFFECT MY GOVERNMENT BENEFITS ?
The funds from a reverse mortgage generally do not affect regular Social Security or Medicare benefits.
However, needs-based benefits, such as Medicaid and Supplemental Security Income (SSI), may be impacted. We can provide additional general information, but you should contact a financial professional or government benefits specialist about your particular situation.
However, needs-based benefits, such as Medicaid and Supplemental Security Income (SSI), may be impacted. We can provide additional general information, but you should contact a financial professional or government benefits specialist about your particular situation.
HOW CAN I USE THE PROCEEDS ?
You can use the proceeds however you choose. For example: to supplement your retirement income, establish a "rainy day" fund, or cover healthcare or in-home care costs. You can even use a reverse mortgage to purchase a new home that may better fit your needs and wants. Ask us about our HECM for Purchase option.
WILL I HAVE TO PAY ANY FEES ?
Most of the fees associated with a reverse mortgage can be financed with the loan with the possible exceptions of the government required counseling and the home appraisal. The other costs are added to the loan amount (principal) and paid along with the accrued interest when the loan becomes due. These fees may include an origination fee, closing costs, a mortgage insurance premium (required for HECM loans) and a possible monthly servicing fee.
WHAT HAS TO BE REPAID WHEN THE LOAN BECOMES DUE ?
You will repay the loan balance, any fees that have been added, and the accrued interest. Homeowners (or their heirs) usually choose to do this through the sale of the home. Repaying the loan with other assets or by refinancing with a conventional mortgage is also an option, if you or your heirs want to keep the home.
WHAT IF a CO-BORROWER PASSES AWAY OR MOVES OUT FOR HEALTH REASONS ?
The other borrower continues to own and live in the home and enjoy all the benefits of a reverse mortgage.
WANT TO KNOW MORE? PLEASE CONTACT ME
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Copyright © 2023 by George Stewart
All rights reserved. The author is solely responsible for this content and is not affiliated with or acting on behalf of any government agency.
All rights reserved. The author is solely responsible for this content and is not affiliated with or acting on behalf of any government agency.
This material is not from, approved, or issued by the FHA, HUD, or any government agency. The content on these pages is for informational purposes only and is subject to change without notice. Please consult a professional for tax or financial advice.
A reverse mortgage is a home loan and not a government benefit. The borrowers must continue to own and occupy the property as the primary residence and are responsible for paying property taxes, homeowner's insurance, and property maintenance.
A reverse mortgage is a rising debt, falling equity loan. Negative amortization causes the loan balance to increase as accrued interest and fees are added. Failure to comply with the terms and conditions of the loan could trigger a loan default that results in foreclosure.
Subject to underwriting approval. Application is required and not all applicants will be approved. Full documentation and property insurance required. Loan secured by a lien against your property. Fees and charges apply and may vary by product and state. Terms, conditions and restrictions apply.
A reverse mortgage is a home loan and not a government benefit. The borrowers must continue to own and occupy the property as the primary residence and are responsible for paying property taxes, homeowner's insurance, and property maintenance.
A reverse mortgage is a rising debt, falling equity loan. Negative amortization causes the loan balance to increase as accrued interest and fees are added. Failure to comply with the terms and conditions of the loan could trigger a loan default that results in foreclosure.
Subject to underwriting approval. Application is required and not all applicants will be approved. Full documentation and property insurance required. Loan secured by a lien against your property. Fees and charges apply and may vary by product and state. Terms, conditions and restrictions apply.