What if I live in Florida for half the year?
That’s fine, you just need to live in your primary residence for six months and a day.
Will your heirs receive more or less after you pass away than they would without a reverse mortgage?
It depends on what you do with your overall finances. Some families will receive more by being more efficient with the use of their portfolio of assets; however again, because this is not financial advice, it is very important that you consult with your financial advisor to make the best use of a reverse mortgage for your specific situation.
What if I go into a nursing home?
As long as you are simply rehabilitating and getting better, your home and reverse mortgage are still yours until two doctors agree it is impossible for you to ever return to your home.
When does the reverse mortgage have to be paid back?
Your reverse mortgage will become due when one of these things happen:
- You sell your home.
- You permanently move out of your home.
- The last person on the title passes away. Your heirs will have two options. They can choose to sell the property, pay off the reverse mortgage balance and keep any remaining equity, or they can choose to keep the property by refinancing the balance of your reverse mortgage with a new mortgage in their name. Remember if the loan balance ever exceeds the home value, it does NOT trigger an early payoff or cause you to have to move out of your home.
If you took all of the money from the reverse mortgage in a lump sum and spent every bit of it, would you be able to go on living in your home?
Yes, your reverse mortgage will not become due until you pass away, sell your home, or are no longer living in the home. If you use all of the available proceeds, you would not have any more money available and interest would accrue until one of the three events referenced above occurred.
What happens if at any time the amount you owe under a reverse mortgage is greater than what your home is worth?
Nothing as long as you still live in your home and pay taxes, homeowners insurance, and maintenance.
If you get a reverse mortgage, how does that change the amount of money that you will leave to your children (or other heirs)?
Most likely, it will decrease the amount of money the heirs will receive from the value of the home. However, your overall net worth will likely get better, because you will not be spending as much from your other accounts.
When you have a reverse mortgage, who owns your house (whose name is on the title/deed)?
You remain the owner of your property. There is no change to the deed or title of your home when completing a reverse mortgage.
There are several “payment options” or ways to get money from a reverse mortgage. Which payment option do you think will best meet your needs?
It depends on your situation. Our trained loan officers have helped hundreds of seniors pick the best option for their personal situation. You can do a lump sum payment, ongoing monthly payment, or you may also choose a line of credit allowing you to access your money as you need it. Your line of credit will be guaranteed to grow every year that you don’t use it.
What happens if you change your mind later and want to change your payment plan?
As long as you still have money available to borrow from your reverse mortgage, you can change your disbursement option for a small, one-time fee. Remember when the value of the loan is higher than the home value it does not trigger an early payoff or due date.
When you have a reverse mortgage, do you have to make a monthly mortgage payment to the bank?
No, but for tax or cash flow purposes including Medicaid planning you may wish to do so.
What basic responsibilities will you continue to have after you get a reverse mortgage?
The homeowner remains responsible for the payment of annual property taxes and homeowner’s insurance as well as basic upkeep of the property.
What may happen if you do not keep up these responsibilities as a borrower?
If you do not continue to do these three basic things, the lender is required by HUD to foreclose.
When you purchase a home with a HECM, will the HECM be held on your existing home or your newly purchased home?
The HECM will be held on the newly purchased home as your primary residence.
How will the lender determine how much money you will need at closing?
The down payment you will need to bring to closing will be determined based on your age, interest rates at the time and the sales price (or appraised value, whichever is less) of the home you are buying.
What sources of funds (money) are allowed when you purchase a home with a HECM?
The money must come from your own liquid assets (bank accounts, CD’s, retirement accounts, etc.) or from the documented sale of other assets you may have (your present home for example).
Why is my down payment higher with a reverse mortgage?
Your down payment is higher initially because you will never be required to make a monthly payment (except for taxes, insurance, and maintenance). With a traditional mortgage you would potentially lose more in cash flow over the years because of the consistent required payments. Remember the HECM for Purchase also can allow you to purchase a more expensive home than what you would otherwise be willing to commit to in payments for the next 20-30 years.
Reverse Mortgage Benefits
- Tax free cash from loan proceeds*
- Increased discretionary cash flow
- Can sell YOUR home at any time
- Keep The Title To Your Home
- Basic Credit & Income Qualifications
- Loan Proceeds from Equity 30-70% are Usually Tax Free*
- Does NOT Require Repayment Until The Last Living Borrower Permanently Leaves The Home
- Never Owe More Than Your Home Value – With FHA Reverse Mortgage**
- Able To Purchase A Home For 30-70% Down Of New Residence Sale Price***
*This advertisement is not tax advice. Please consult a tax advisor for your specific situation.
**There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes, insurance and maintenance of home. Credit is subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.
*** The required down payment on your new home is determined on a number of factors, including your age (or eligible non-borrowing spouse’s age, if applicable); current interest rates; and the lesser of the home’s appraised value or purchase price.
Eligibility Requirements to Purchase
- Borrower(s) must be 62 years or older
- Must be homeowner and either own home outright or have significant equity; must live in home as primary residence (live there 6+ months per year)
- Property must be a single-family home, 2- to 4-unit dwelling or FHA-approved condo
- Must meet minimal credit and property requirements
- Must receive reverse mortgage counseling from a HUD-approved counseling agency
- Must not be delinquent on any federal debt
Reverse Mortgage Basics
Tax Free Money from Your Home Equity:
A reverse mortgage can be used to turn a portion of the equity in your home into cash that can be used for many different purposes that may enhance and extend your retirement. If you currently have a mortgage, a reverse mortgage could eliminate your mortgage payment (taxes and insurance must still be paid, and the home maintained), and also allow you to access any additional equity (over and above your mortgage balance), to create accessible cash which is not readily available while in the form of home equity. You have spent many years putting your money into your home equity, and now with a reverse mortgage, you may be able to convert some of that equity into tax-free* cash.
*This advertisement is not tax or financial planning advice. You should consult a tax and/or financial expert for your specific situation.
Never a Mortgage Payment During the Life of the Loan
A reverse mortgage is the only type of mortgage that never requires a payment of principal and interest until the last surviving borrower passes away or moves out of the home, as long as all loan terms are met. You are always required to pay household expenses such as taxes and insurance, and maintain your home. If you take the reverse mortgage as a line of credit, monthly draws, or a lump sum, you will never be required to make a payment during your lifetime as long as you live in your home and meet all other loan terms. You always have the option to make a payment if you wish. If you choose to make a payment toward your line of credit, the money may increase your available funds in your line of credit.
Never Owe More Than What the Home is Worth*
When you permanently move out of the home, whether you sell it or pass away, neither you, your estate nor your heirs are responsible to pay the deficit if the balance owed on your reverse mortgage exceeds the home value. However, should your heirs want to keep your home, they may purchase it for 95% of the current appraised value.
*There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.