Questions And Answers
Q: How do you qualify for a Reverse Mortgage?
A: Reverse mortgages are for homeowners at least 62 years of age with equity in their homes.
Q: Am I able to get a reverse mortgage if there is already an existing mortgage on the home?
A: Yes, but any existing mortgage must be paid off when the reverse mortgage closes. The funds from the reverse mortgage can be applied to that purpose.
Q: Is there any tax drawback for the reverse mortgage proceeds?
A: No. Funds received from a reverse mortgage are generally labeled as loan advances and not taxable income. Consult your tax advisor for further detailed information.
Q: Can the interest charged on a loan principle be deducted for tax purposes?
A: The interest that accrues on your loan is generally deductible when the loan is repaid, which occurs when the last borrower permanently leaves the property.
Q: How do the proceeds from a reverse mortgage affect Social Security, Medicare or Pension benefits?
A: The benefit of having a reverse mortgage typically does not interfere with these benefits. Consult your financial advisor or local senior agency for further detail.
Q: Will a reverse mortgage affect Medicaid benefits?
A: Generally a reverse mortgage will not affect these or most other means-tested benefits as long as the monthly cash advances are fully spent every month and not accumulated. However, programs do vary by state so we strongly encourage you to confirm with your local senior services agency that your benefits will not be affected.
Q: What are the costs associated with a reverse mortgage?
A: With a reverse mortgage program, there is an origination fee, a mortgage insurance fee, and actual closing costs, including charges by the title and/or escrow companies. These necessary costs can be financed through the loan itself and are not paid "out-of-pocket". You receive full disclosure of all financed costs in the initial loan documents. The property appraisal is usually an out-of-pocket expense. In case of need, arrangements may be made for its payment from reverse mortgage funds.
Q: How much is owed when the repayment is due?
A: Of course, money that you have received plus accumulated interest and service fees (when applicable) up to the appraised market value of the home, must be repaid eventually. Repayment is generally required within 12 months of the maturity event.
Q: Will I ever owe more than my home is worth?
A: You, your heirs, or your estate cannot be required to repay more than the appraised market value of the home at the maturity of the loan. If the loan balance exceeds the value of the home, you, your heirs, or your estate will only be required to repay an amount up to the current appraised value of the property.
Q: Do I retain the title to my home?
A: A reverse mortgage is only a lien against the property; therefore, the title will stay in your name.
Q: With no monthly mortgage payments, am I responsible for any other expenses related to the home?
A: You are required to pay your property taxes, homeowners and flood (if required) insurance premiums and other expenses necessary to maintain your home.
Q: When does the loan need to be repaid?
A: Loan repayment is due when the home is sold or is no longer occupied as your primary residence. In a case of more than one borrower, repayment is due when the last borrower permanently moves out. Until one of these events takes place, the last borrower may live in the home and never have to be responsible for a monthly mortgage payment.
Q: Will my heirs have to sell the property to repay the loan?
A: No, the loan can be repaid by refinancing the existing reverse mortgage with a standard mortgage loan.
Q: Will a reverse mortgage affect the future sale of the home?
A: The impact of a reverse mortgage is no different than that of a purchase or refinance mortgage. Repayment of the mortgage is due upon sale of the home.
To find out how much you qualify for - CLICK HERE
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