For answers to all your reverse mortgage questions, contact us anytime.
What is a reverse mortgage?
A reverse mortgage is a loan that enables homeowners who are at least 62 years old to convert some of their home equity into tax free cash or a line of credit, or to finance a home purchase. There are no monthly mortgage payments. The borrowers continue to live in and own their home. Unlike a traditional home equity loan or home equity line of credit, a reverse mortgage doesn’t have to be repaid until the last surviving borrower (or a non-borrowing spouse who meets certain requirements) no longer lives in the home, or the home is sold.* The homeowners remain responsible for keeping current with property taxes and hazard insurance, and maintaining the condition of the home.
Am I eligible?
To be eligible for a reverse mortgage:
- You must be age 62 or older.
- The home must be the borrowers’ primary residence, and must meet Federal Housing Authority (FHA) minimum property standards and flood requirements.
- The home must be one of the following property types: single-family home; or 2-to-4 unit home with 1 unit occupied by the borrower; or HUD-approved condominium. With new construction, the Certificate of Occupancy or equivalent must be issued before you apply.
- You must have sufficient home equity. We can tell you if you have enough home equity to qualify.
Will the bank own my home?
No. Just like a traditional mortgage, as long as the terms of the loan are met, the borrowers retain full homeownership and can sell the home at any time.
How much money can I get?
This depends on a number of factors, including: the age of the youngest borrower or non-borrowing spouse, your home value, the amount of equity, FHA lending limits, the current interest rate, and the reverse mortgage product and payment option you choose. We can provide you with a quote that’s tailored to your specific situation, with no cost or obligation.
How do I receive my proceeds?
You can take your funds as a lump sum; line of credit; monthly payments for a specified time period, or for as long as you live in the home; or a combination of these.
Am I spending my children’s inheritance?
A reverse mortgage may help you plan for a more comfortable retirement, lived with greater financial independence. We encourage you to involve family members in your decision process—so you can make the choice that’s right for you. When the home is sold or is no longer your primary residence, the loan must be repaid. Any remaining equity belongs to you or your estate, and can be transferred to heirs.
What are the costs associated with a reverse mortgage?
Up-front costs may include a property appraisal fee, origination fee, closing costs, mortgage insurance premium, a modest charge for HECM counseling, and a servicing fee. You can roll most of the up-front costs into the loan, so out-of-pocket expense can be minimized. While closing costs vary based upon the type and size of the loan, they’re similar to those for any traditional mortgage. During the life of the loan, interest and a monthly insurance premium accrue. We will give you a detailed cost breakdown.
When do I have to pay back the loan?
You do not have to make principal and interest payments while you live in the home as your primary residence — no matter how long you live. (As the homeowner, you remain responsible for property taxes, required homeowners insurance, and home maintenance.) As long as the terms of the loan are met, a reverse mortgage does not have to be repaid until the last surviving borrower (or a non-borrowing spouse who meets certain requirements) no longer lives in the home as their primary residence, or the home is sold.
Will this affect my Social Security or Medicare?
Reverse mortgages typically don’t impact regular Social Security or Medicare benefits; but since programs vary from state to state, be sure to consult a benefits professional.