Frequently Asked Questions about Reverse Mortgage.

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1. What is a reverse mortgage?

2. How do I qualify for a reverse mortgage?

3. Why should I get a reverse mortgage instead of an equity line of credit?

4. How much money can I get?

5. What kind of reverse mortgage programs are available?

6. What are the interest rates on reverse mortgages?

7. How can I receive my money?

8. How can I use my reverse mortgage proceeds?

9. Does the bank take my home when I die?

10. How much does it cost to get a reverse mortgage?

11. Are the proceeds to a reverse mortgage taxable?

12. How do the reverse mortgage proceeds affect my Social Security and Medicare?

13. Is there a Code of Conduct for reverse mortgage lenders?

1. What is a reverse mortgage?

A reverse mortgage is a loan designed specifically for senior homeowners, age 62 and older. The senior is able to convert a portion of their home equity to pay off any existing mortgage, pay for medical or home care and create tax-free* cash if they choose. The senior stays at home, keeps ownership and makes absolutely no payments until they permenantly move from their home.

2. How do I qualify for a reverse mortgage?

You must be at least 62 years old and have enough equity in your home to pay off any existing mortgage. There are no credit or income qualifications.

3.Why should I get a reverse mortgage instead of an equity line of credit?

Both a reverse mortgage and a home equity line of credit (HELOC) can be used to convert equity into cash. The HELOC may have credit and income qualifications and you still have to make regular monthly payments. With a reverse mortgage all you need is to be 62 years old or older and have equity in your home to qualify. There are NO PAYMENTS as long as you live in your home!

4. How much money can I get?

Your reverse mortgage proceeds will depend upon your age, which program you choose, current interest rates and the value of your home. Generally the older you are the more money you receive.

5. What kind of reverse mortgage programs are available?

There are many: FHA Home Equity Conversion Mortgage - This is the most popular of all reverse mortgages on the market. Reverse mortgages are growing in popularity. There are more products on the market than ever before. However, not all reverse mortgages will fit your needs. We know what questions to ask you to help you make the right choice for yourself. Each plan has it's unique components. We'll help you do the research and provide you with the complete picture. Back To Top

6. What are the interest rates on a reverse mortgage?

For the FHA HECM loan, the interest rate is based on the 1 month LIBOR index or published fixed rates. A majority of reverse mortgage products have variable rates. There are a few that are fixed. However, the fixed rate reverse mortgages are usually attractive for borrowers who want a lump sum or have a larger mortgage to pay off. Call us, we'll help you with the details and show you what to look for.

7. How can I receive my money?

Reverse mortgage payment options have great flexibility and are designed to meet your individual needs.

You can receive a lump sum all at once.
You can receive equal monthly payments as long as you live in your home.
You can receive your money in equal amounts for a specified amount of time.
You can set up a line of credit; which you can draw on as needed.
You can also choose a combination of line of credit with monthly payments and cash at closing. It's up to you!

8. How can I use my reverse mortgage proceeds?

You can use the money for anything. It can be used to enhance your present retirement income, pay for health or home care, home improvements, pay off an existing mortgage or travel. You can even send a grandchild through college or help a child start a business if you choose. There are no limits, it is your money.

9. Does the bank take my home when I die?

No, Your loan becomes due only when you permanently move from your home or pass away. At that time your heirs will have the choice of refinancing your home, paying off the reverse mortgage and keeping the home. Or, selling the home and paying off the reverse mortgage and keeping any the equity from the sale. Your reverse mortgage is only tied to your home and may not be tied to any other assets in your estate.

10. How much does it cost to get a reverse mortgage?

The costs to attain a reverse mortgage are similar to attaining a conventional loan, the fees include origination, title and appraisal among other typical fees. Some reverse mortgage costs are paid by your lender.The reverse mortgage is structured so you will have no or little out of pocket costs. There are NO hidden fees or costs associated with reverse mortgages. All fees are divulged. Back To Top

11. Are the proceeds of a reverse mortgage taxable?

No, your proceeds are not taxable*. You are still responsible to pay for property taxes and homeowners insurance.

*Please consult your tax expert.

12. How does the reverse mortgage proceeds affect my Social Security and Medicare?

Generally, having a reverse mortgage will not affect your Social Security or Medicare benefits*.

If you receive need based benefits such as SSI or Medicaid it is advisable to consult with your benefits consultant. You can attain a reverse mortgage and structure the receipt of your proceeds so your benefits are unaffected*.

*Consult your benefits expert.

The interest on your reverse mortgage is deductible when the interest is paid on the loan (at its completion).

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