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 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 info.

• 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 do 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.