REVERSE MORTGAGE FAQs

What is the age requirement to apply?

In order to apply for reverse mortgage refinancing, you must be at least 62 years of age by or at the time of the application process. 

What is the difference between reverse refinancing and refinancing? 

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What is a reverse mortgage and how does it work?

A reverse mortgage is a loan secured against the equity in your house that you obtain from your mortgage provider. The funds are sent to you in a lump sum, as a line of credit, or in monthly installments. Fees and interest are imposed on the loan amount (or "loan profits"); as a result, your loan debt rises over time and your home equity falls.

How will my reverse mortgage loan be repaid if no monthly payments are required?

You or your heirs can either sell the house or pay down the loan sum and maintain the house to pay off the loan debt.

How can I know whether I'm eligible for a reverse mortgage?

To be eligible, you must be 62 years old or older and the owner of your house. You must also have enough equity in your house and fulfill HUD's financial qualifying requirements.

Will there be any consequences if I want to repay the loan early?

No. You don't have to worry about getting penalized if you wish to pay back the loan at any point.

What if I have an existing mortgage?

It's fine if you presently have a mortgage. However, upon closing, you must use a part of the cash from your reverse mortgage loan (or funds from another source) to pay off any existing mortgage you have on the property.

Will I be able to keep my house or will I have to sell it?

You will still own your house and be able to stay in it for as long as you want as long as you continue to use it as your primary residence, pay your property taxes and insurance, and keep it up to FHA standards.

Is there a requirement for property and insurance?

You're responsible for regular maintenance and upkeep, as well as paying any continuing property taxes and insurance, because you still own your house with a reverse mortgage loan. These costs are frequently covered by proceeds from your reverse mortgage loan.

With a reverse mortgage loan, how much of my home's equity can I access?

The loan amount is determined by a variety of factors, including the reverse mortgage loan type you select. The amount you can borrow is determined by the youngest borrower's age, current interest rates, and the lesser of your home's assessed value, sale price, or the FHA maximum lending limit. To pay for taxes and insurance, you may need to set aside additional dollars from the loan profits.

What am I able to do with the money?

The money you get from your reverse mortgage loan can be used any way you choose such as paying for medical expenditures (including in-home care), house enhancements, and living expenses once you have paid off any existing mortgage. Once you get the net revenues, there are no constraints or restrictions.

Will I be required to pay taxes?      

Money received is generally not considered income and should be tax-free, however you must continue to pay property taxes as necessary. For any tax or government benefit implications, consult your financial advisor and the proper government institutions.

Is this loan going to have an impact on my Social Security or Medicare benefits?

Payments on a HECM reverse mortgage loan usually have no impact on your Social Security or Medicare benefits. The federal Supplemental Security Income program, as well as state-administered programs like Medicaid, Aid for Dependent Children (AFDC), and food stamps, have different requirements. To find out how HECM payments can influence your circumstances, speak with a benefits consultant at your local Area Agency on Aging or the local offices for these programs.

Will my family or estate ever owe more money than my house is worth?

No. When the loan is due, a reverse mortgage loan will never require you to return more than the appraised worth of your property, as long as the home is sold to satisfy the debt.

What should I do if my parents have a reverse mortgage and they pass away?

You should contact the loan servicer first to inform them that the borrower(s) has died. The servicer's contact information is usually found on the monthly bill. Following notification of the loan servicer, they will assist you (the heirs) with the next stages.

What are the advantages of taking out a reverse mortgage?

A reverse mortgage allows you to leverage the value of your property to generate income while remaining in your home. It might be a good method to get the most out of the money you've put into your property over the years.

Can I leave my home to my heirs?

Yes. Your estate or chosen heirs may keep the property and pay the mortgage sum or 95 percent of the home's current appraised value to repay the reverse mortgage debt.

What if the money from the sale of my property are insufficient to pay off my debt?

In most situations, the Federal Housing Administration (FHA), which insures most reverse mortgages, will cover sums outstanding that are not fully paid off by the selling proceeds as long as the property is sold for at least the lesser of the mortgage balance or 95 percent of the current appraised value. No debt is passed on to your heirs or estate.

Is it possible to add a borrower to a reverse mortgage?

No, reverse mortgages do not allow for the addition of co-borrowers after the loan has been approved.

What happens if I don't pay my property-related bills or keep my house in good repair?

If you don't follow the terms of your reverse mortgage, you risk losing your money. This implies that the mortgage company has the right to demand full payment of the reverse mortgage debt, as well as to foreclose and sell the property.

Will I be required to pay back the loan?

The loan does not have to be returned as long as you remain in the home as your primary residence, maintain it, and pay property-related costs on time. The debt becomes due and must be paid off if you relocate or sell the property. Furthermore, the debt becomes due and payable when the last remaining borrower passes away.

Is a reverse mortgage a good option for me if I'm about to finish my original mortgage?

Yes. A reverse mortgage is an excellent option if you have little to no remaining on your original mortgage and want to stay in your house for at least five more years. With a reverse mortgage, you may continue to pay your bills, supplement a declining income, and better manage your retirement spending.