Q: What is a reverse mortgage?
A: A reverse mortgage is home loan for people over the age of 60 that does
not require any monthly mortgage payments. It is similar to a line of credit,
except that does not require monthly loan payments and can be only loan on the
home.
Q: Does the bank take the house?
A: No. A reverse mortgage only a loan on the home. The title remains in the
name and control of the borrower.
Q: When is a reverse mortgage repaid?
A: When the homeowner sells the property, moves out, or is deceased. If
there are two homeowners and one passes away, the loan continues as normal with
the second homeowner.
Q: What is repaid to the bank?
A: Only the amount of money paid to or on behalf of the homeowner, including
interest that has accrued on the loan.
Q: What are the borrowers’ obligations?
A: Keep current the property taxes and home owners insurance, maintain the
home in a basic livable condition, and continue to occupy the property.
Q:
In what ways can the reverse mortgage money be paid to me?
A: With the flexibility of a line of credit, the funds are available as
follows:
Lump sum up front - often used to pay off an existing mortgage
Line of credit – tap into it at any time and in any amount up to your
credit limit
Tenure – a monthly payment for as long as you live in the home
Term - a monthly fixed amount for a predetermined period of time
Any combination of these choices
Q: What happens if I use up all the money from my reverse mortgage?
A: If you have pulled out all of the money from a reverse mortgage lump sum,
line of credit, or term payments, nothing happens. The loan simply continues and
remains in place, with no mortgage payments due. To ensure that the money from a
reverse mortgage never runs out, choose the tenure option.
Q: What can I do if I use up all the money?
A: You can continue to live in your house, without payments; you can sell
the house (and pocket the net proceeds); or if you qualify, you can refinance
the reverse mortgage and get an additional money.
Q: Must the home eventually be sold to repay the loan?
A: No, the reverse mortgage can be repaid and the home kept in the family.
Usually, this is done using a traditional mortgage.
Q: How much equity do I have?
A: You can figure your current equity by subtracting your mortgage from the
current value of your home. For example, if your mortgage balance is $50,000 and
your home is worth $200,000, then the equity that you have in your home is
$150,000.
Q: What if I already have a mortgage?
A: The proceeds from your new reverse mortgage must first be used to pay off
any existing mortgage, thereby eliminating your mortgage payment. The amount of
reverse mortgage money remaining is available to you as described above.
Q: What kinds of property do not qualify for a reverse mortgage?
A: Vacation houses and other non-primary homes, mobile or manufactured homes
manufactured prior to June 15th 1976, multi-unit properties with greater than
four units and housed constructed on leased land are not eligible.
Q: What if I have set up a Trust?
A: A home in a trust will usually qualify for a reverse mortgage. The trust
documents must be reviewed by the lender.
Q: Are reverse mortgage proceeds taxable?
A: The Internal Revenue Service usually considers reverse mortgage money to
be loan advances and not taxable income. Please consult your tax advisor.
Q: Can the interest charged on my loan principal be deducted for tax
purposes?
A: Usually, home mortgage interest is deductible when you actually pay it.
If you need the tax deduction, you may pay the interest on the reverse mortgage.
Please consult your tax advisor.
Q: How do the monies from a reverse mortgage affect Social Security,
Medicare or pension benefits?
A: A reverse mortgage usually does not affect any benefits. For your
specific situation, we recommend that you consult your benefits provider.
Q: If I take out a reverse mortgage will, my Supplemental Social Security
(SSI), Medicaid benefits be affected?
A: As long as any cash advances are fully spent every month, a reverse
mortgage will not usually affect these or most other "means tested" benefits.
Program rules change periodically so check with the local Area Agency on Aging
or benefits provider.
Q: What are the closing costs?
A: An origination, title and escrow fees. These costs are usually paid with
loan proceeds, not out-of-pocket. Please request a free quote to see the closing
costs for your circumstances.
Q: What if the reverse mortgage balance overtakes the value of my home?
A: You can never owe more than the value of the home regardless of loan
balance because reverse mortgages are "non-recourse" loans. In this unlikely
scenario, you can continue to live in your home payment-free.
Q: Where can I get more detailed reading material on reverse mortgages?
A: See Reverse Mortgage Publications
Q: How do I get my other questions answered?
A: Contact us calling (toll free) 1-888-644-0189 or by clicking here for
live chat.
Call Toll Free: 1-888-644-0189 to speak with an Advisor.
