|
Reverse Mortgage FAQ's
Reverse
Mortgages are revolutionizing the way seniors are securing financing.
While HUD's Reverse Mortgage is a safe and federally-insured program
that gives older Americans greater financial security, many seniors are
bombarded with falsehoods. Unfortunately, the relative
newness of this program has ignited the old saying, "people fear what
they don't understand." So please exercise your own due diligence and
get the proper answers; if someone can't answer your question than go to
someone who can. Please take the time to read through the
Questions and Answers and contact a representative if you have any
questions.
You can receive free
information about reverse mortgages by calling
Phone: (877) 449-4535, toll-free. Since your home is probably your
largest single investment, it's smart to know more about reverse
mortgages, and decide if one is right for you!
• Who really owns my home?
You do. A reverse mortgage is just a lien similar to a
traditional mortgage. You can sell your home at any time.
• Will the Bank or Lender
take my home or receive
the title to my home?
NO. The homeowner always
retains title to the property and can choose to sell the home at
anytime. There are no prepayment penalties or restrictions of any kind.
• Will the Bank or Lender split the equity in the home
with my heirs when I die?
NO. Your children are
entitled to all the equity in the home, just as you were. They may
receive their equity by selling the home and paying off the balance of
the reverse mortgage from the proceeds of the sale; or they may keep the
home by refinancing the home with a traditional mortgage and paying off
the reverse mortgage, or they may keep the home by using money from
other sources to pay off the reverse mortgage.
• What if I owe more on the Reverse Mortgage than
the
home is worth?
The Reverse Mortgage is what
we call a non-recourse loan. It is insured by FHA (Federal Housing
Administration). This means that you will never be required to pay back
any portion of the loan amount that exceeds the fair market value of
your home.
•
I already have a mortgage on my home, can I still
get
a Reverse Mortgage?
Yes. You can payoff your
existing mortgage or equity line with a Reverse Mortgage. In fact, many
people get a Reverse Mortgage for this reason: to get rid of their
monthly payments forever.
• How safe are FHA insured
reverse mortgages?
They are very safe. You
or your heirs retain all ownership rights. It is
impossible to fall behind on payments because there are
none to make.
• Do I need good income
and credit to qualify?
No - A Reverse Mortgage has no income or credit
qualifications. To qualify you need to be at least 62 years of age and
your home must be your primary residence and the home must have enough
equity in it. Consult your representative for further information.
• Does the Reverse
Mortgage require that I make monthly
payments?
No - There are never
monthly payments.
The borrower is responsible for payment of taxes, insurance, and general
upkeep of the home and that is it.
• If I take out a Reverse
Mortgage will I eat up all my equity
and leave nothing for my kids?
No - "Retained Equity" is
a very important concept to grasp. Realize that your property will
continue to appreciate (the whole value of the estate) and you pay
interest on only the smaller amount borrowed. Please consult your
representative for amortization tables that might apply to your specific
situation.
• Do I have to pay income
tax on the proceeds of the
reverse mortgage loan?
Proceeds received from a
reverse mortgage are loan advances and not taxable
income. For your specific situation, we recommend that
you consult your tax advisor.
• Will the Reverse
Mortgage affect my Social Security and
Medicare benefits?
No, because reverse
mortgages are considered loan advances and not income,
the IRS considers them not to be taxable. Therefore, a
reverse mortgage should not affect your Social Security
or Medicare benefits.
• If I take out a Reverse
Mortgage, will it affect my
government benefits?
Funds from a reverse
mortgage do not affect regular Social Security or
Medicare benefits however, you should check with a
professional advisor to find out the affect it might
have on federal, state or local assistance programs such
as social security supplemental income.
|
