FAQ – Reverse Mortgage

Will the lender take my House?

If you meet and keep all borrower obligations current, nobody will take your home away.....


Will the lender take my home away if I outlive the life of loan?

Absolutely not! As long as at least one of the borrowers resides in the property, keeps taxes and insurance current and keeps the home in good repair, your home is yours.


Can I leave my home to my heirs?

Yes. Your estate or designated heirs may retain the property and satisfy the reverse mortgage debt by paying the lesser of the mortgage balance or 95% of the then-current appraised value of the home.


When should I consider reverse mortgage?

The length of time you maintain your reverse mortgage can play a large role in determining the value of its benefit to you. If you intend to sell or otherwise vacate your home within the next two to three years, there may be better options to consider. If you know you will be staying in your home more than 2 or 3 years, then reverse mortgage could be considered.


Will I lose my government assistance if I get a reverse mortgage?

A reverse mortgage does not affect regular Social Security or Medicare benefits. If you are on Medicaid or Supplemental Security Income (SSI), any reverse mortgage proceeds that you receive must be used immediately. Funds that you retain count as an asset and could impact eligibility.


Where do I get expert advice before applying for reverse mortgage?

Lenders are required to assist potential applicants to find counseling centers because borrowers are required to participate in a counseling session as part of reverse mortgage approval process. Counselors are obligated by law to discuss the implications of this type of financing, as well as any other options that may be available.


What are the eligible properties?

Eligible property types include single-family homes, 2-4 unit properties, manufactured homes (built after June 1976), condominiums, and townhouses.


What is the effect of my income or credit history in getting reverse mortgage?

None.


What if my home is in living trust?

A homeowner who has put the home in a living trust can usually take out a reverse mortgage.


What will happen to my existing mortgage?

The new reverse mortgage must be the only lien attached to the property. If there is not enough equity in the home to pay off the existing mortgage, you will be required to use your personal liquid assets to satisfy the difference.


Can I get reverse mortgage on an investment or resort property, second home?

No; only a primary residence is eligible for a reverse mortgage.


Can I have more than one person on my reverse mortgage?

Yes. All homeowners on the note must be at least 62yrs of age and occupy the home as their primary residence.


Is it possible to add anyone to the title of the home after getting reverse mortgage?

Yes. They must be eligible for reverse mortgage financing and must be added to the reverse mortgage.


Can somebody who is not related to me be on the reverse mortgage with me?

Yes; as long as the applicant meets all age and occupancy requirements.


Can I ever refinance after getting reverse mortgage?

Yes. A reverse mortgage can be refinanced into a new reverse mortgage or into a traditional mortgage.


How does the interest work on a reverse mortgage?

With a reverse mortgage, you are charged interest only on the proceeds that you receive. Interest is not paid out of your available loan proceeds, but instead compounds over the life of the loan until repayment occurs.


What is the Right of Rescission?

This is your right to cancel your loan, for three business days after your loan closing. Lenders are prohibited from charging interest on the funds which are held available for you during the three day rescission period.


Why do I need to sign two (2) Mortgages and Notes at my closing?

The lender must complete a second mortgage and second note to secure any payments made by HUD to you. The second mortgage and second note secure any mortgage payments which might be made by HUD to you in the event that the lender fails to make the payments under the loan Agreement.


What does “non-recourse loan” mean?

Most reverse mortgage loans are considered “non-recourse loans."  This means that you can never owe more than the value of your home at the time you or your heirs sell your home to repay your reverse mortgage.  If your loan is a Home Equity Conversion Mortgage ("HECM"), the reverse mortgage debt may be satisfied by paying the lesser of the mortgage balance or 95% of the current appraised value of the home.