Reverse Mortgage Frequently Asked Questions

You can stay in your home – You retain title of your home and can remain in it.
No monthly mortgage payments – You will not make any monthly mortgage payments or have to repay the loan until you move out of the house.
Independence – The Reverse Mortgage will allow you extra money to help with expenses, help your family or travel.
Tax Free Money* - The money you receive from the Reverse Mortgage is not considered income and therefore will not affect your Social Security or Medicare benefits.
*Consult your tax advisor
Flexibility – The money from the Reverse Mortgage is available for anything that you would like to spend it on.

What Reverse Mortgage products are available?

There are three types of Reverse Mortgages:

Home Equity Conversion Mortgages (HECM) – These loans are insured by the U.S. Department of Housing and Urban Development (HUD). These are the most common type of reverse mortgage and offer the benefits of no monthly payments, no income or credit requirements, unrestricted use of the proceeds of the loan and flexible withdrawal options.
Home Keeper – These loans are secured by Fannie Mae, a government sponsored agency. The features of this loan are the same as the Home Equity Conversion Mortgage except you may also be able to use the Home Keeper to purchase a home.
Proprietary Reverse Mortgages – These are loans that are given from private lenders and have unique features depending on the lender that is issuing the loan. These features include items such as higher loan amounts than the Home Equity Conversion Mortgages or Home Keeper loans, the ability to lend on unique property types such as co-ops and the ability to lend when the property is held in unique types of trusts.

What can I use the money for?

There are no restrictions on how you choose to spend your money. Therefore, it can help you with daily living expenses, medical expenses, home improvements or you can take that trip you have always dreamed about. Maybe you just want to save the money and enjoy the piece of mind of being financially secure.

Is counseling required?

Yes. All products require counseling to ensure you are clear on how the mortgage works and that you have selected the reverse mortgage that is best for your needs.

Does the mortgage have to be on my primary residence?

Yes. Reverse mortgages are only available for your primary residence.

Do I need to make monthly payments on a Reverse Mortgage?

No. You do not make monthly payments to the reverse mortgage lender. However, you still are responsible for paying the taxes, insurance and upkeep of the home.

When does a Reverse Mortgage get repaid?

Reverse Mortgage must be repaid, frequently called the maturity event, when one of the following conditions occurs: (a) you sell the home (b) the home is no longer your primary residence (c) the borrowers fail to live in the house for 12 consecutive months because of illness (d) all of the borrowers pass away

Do I need good credit or income to qualify?

No. Credit and income are not used to qualify for this loan. Only the age of the borrower, property value and current interest rate are used to determine the amount of the loan available. If there is an existing mortgage or judgments against the property, they will have to be paid off at time of closing. All other credit card and installment debt can remain open.

What options are available for me to receive the money from the Reverse Mortgage?

There are many options for receiving your money. First, you may take the money as a lump sum. This is beneficial if you need money immediately, but will not allow you access to any future money. Another option is to set up a credit line. This will allow for money to be withdrawn using a check book up to a predetermine credit limit. This is advantageous if you do not have a need for the money now but foresee the need in the future. Interest does not accrue on the money that you have not withdrawn. Yet another option is to elect for a tenure monthly payment that will give you the same amount of money each month until the maturity event. This is great if you are looking for long lasting and consistent extra monthly money to help with living expenses. Lastly, it is possible to set up a combination of all three options. Your Mortgage Consultant will be able to best guide you with this decision.

Will the lender own my home if I take a reverse mortgage?

No. Title to the home will remain in the borrowers name throughout the duration of the loan.

Are there tax consequences to getting a Reverse Mortgage?

Because, Reverse Mortgage proceeds are considered loan advances and not income, they are not taxable. However, you should always consult your tax advisor regarding questions about taxes.

Will my Social Security, Medicare and Medicaid benefits be affected?

A Reverse Mortgage should not have any impact on your Social Security or Medicare benefits. However, if you receive SSI, Medicaid or other public assistance, the money you receive from the Reverse Mortgage can be considered an liquid asset if it is in an account at the end of the year. You must be careful not to let your liquid assets exceed the limits of the program(s) they you participate in. You should consult your tax advisor regarding this issue.

Are my other assets or estate at risk with a Reverse Mortgage?

No. Reverse Mortgages are non-recourse loans meaning that the lender is only entitled to repayment from the equity in your home and not your other assets (or your heir’s assets) regardless of the payoff amount on the loan.

Can I do a Reverse Mortgage on a condo, townhouse or coop?

Yes. Reverse mortgages are also available for homeowners of Condo’s, Coops, and 1 to 4 family homes.

What are the closing costs?

Closing costs vary depending on the loan product you select. In some cases, the closing costs are paid by the lender. If you choose a mortgage in which closing costs apply, the costs will be typical to those of a regular forward mortgage. Closing costs include but are not limited to: Appraisal, credit, title charges, recording fees, and points. A good faith estimate will be provided to you that details all the costs associated with obtaining the mortgage.

How much of a Reverse Mortgage do I qualify for?

The amount of money available from a Reverse Mortgage depends upon the borrower’s age, the value of the home and the interest rate at the time of origination. Please try our Reverse Mortgage Calculator to get an estimate of the amount available to you. You should also call one of our Mortgage Consultants to help you because there are new products constantly becoming available that may not be reflected on the Reverse Mortgage Calculator.

My home is in a “living trust.” Can I still get a Reverse Mortgage?

Yes. In most cases, a homeowner who has put their home in a living trust can still obtain a Reverse Mortgage. The trust documents must be reviewed by one of the lenders attorneys to determine if there is anything that would be unacceptable.

My home is in a “life estate.” Can I still get a Reverse Mortgage?

Yes. In most cases, a homeowner who has put their home in a life estate can still obtain a Reverse Mortgage.