Frequently Asked Questions

Who qualifies for a reverse mortgage?

? You must be 62 years of age or older.
? You must own your home and have substantial equity in it.
? You must live in your home for at least one month each year and it must be your primary residence.

The home must be one of these types -single family home -condominium or townhouse -duplex, triplex or 4-plex (when one of the units is occupied by yourself) -some permanent mobile homes (second homes and non-permanent mobile homes don?t qualify).

What are the benefits of a reverse mortgage?

Tax-free funds for as long as you live in the home. No restrictions on how you may use the funds. No income, medical, or credit requirements. No loan repayments for as long as you live in the home. Retain ownership of your home for life: this is guaranteed as long as you maintain your home, and pay insurance and real estate taxes. Choose a cash-flow plan tailored to your needs. A tax-advantaged way to pass on part of your estate today.

What can the money be used for?

Reverse mortgage funds are not restricted and can be used for a variety of things. Below are just some examples;

Increasing your monthly income
Making home repairs or improvements
Paying off debt
Easing financial emergencies
Paying for health care
Paying property taxes
Travel
Long-term care insurance
Helping your children or grandchildren
Or Anything you choose

Can a reverse mortgage be taken out if there is already a conventional mortgage on the home?

Yes, but any existing mortgages will be paid off at closing. The proceeds from the reverse mortgage will be used for that purpose.

How much money will the borrower be eligible for?

How much the borrower will be eligible for depends primarily upon three factors: the age of the youngest borrower, the value of the home and current interest rates.

How is the money paid?
The borrower(s) may choose from four options.

1. An immediate cash advance lump sum at closing.
2. A credit line account that lets you take cash advances whenever you choose during the life of the loan.
3. Monthly payments for a specific number of years you select
4. Or any combination of the above.

What can the proceeds from a reverse mortgage be used for?

The proceeds from a reverse mortgage can be used for whatever the borrower wishes. For example: home repairs or maintenance, home health care, pay off credit cards, travel, grandchild?s education, etc.

Are there any requirements to know?

Yes. The borrower(s) will be required to have a mortgage counseling session with a HUD-approved counseling agency. This meeting is to guarantee that you are not being subject to predatory lending practices and that the borrowers understand the reverse mortgage program. There is no charge for this session.

At Reverse Mortgages USA, we encourage family members to be included in the entire reverse mortgage process.

How do the proceeds from a reverse mortgage affect Social Security, Medicare or pension benefits?

The proceeds from a reverse mortgage do not affect these benefits.

What are the upfront costs associated with a reverse mortgage?

The borrower will pay an origination fee and actual closing costs.
All of these costs can be financed as part of the initial loan advance.

When does the loan become due and payable?

The loan is due and payable when the borrower sells the property, permanently leaves the home, or passes away. In the case of a couple, it is the last borrower to move out or pass that causes the loan to be due and payable. Until these events take place, the borrower lives in the home and makes no payments to the lender.

Do a client?s heirs need to sell the property to repay the loan?

No, repayment can be accomplished by refinancing the existing reverse mortgage through a conventional mortgage loan.

If there are no payments, what are the responsibilities of a borrower with a reverse mortgage?

Borrowers are required to pay property taxes, keep current property insurance in place, and maintain the home.

What is due when the loan is repaid?

The borrower pays back the cash advances they have received plus accumulated interest.

What if the borrower owes more than the home is worth?

All reverse mortgages are ?non-recourse? loans, which means that the borrower can never owe more than the value of the home regardless of the loan balance.