Reverse Mortgage Frequently Asked Questions & Answers
Q. Who is eligible for a reverse mortgage?
A: Reverse Mortgages are for senior homeowners age 62 and above whom have equity in their homes. If you are a senior and want to eliminate your mortgage payment and/or receive cash a reverse mortgage may be right for you. There are a few Reverse Mortgage Options to choose from and we will help you find the one that is right for you. Talk to a Reverse Mortgage Banker now to get started.
Q. How is a reverse mortgage different from a traditional (forward) mortgage?
A: The main differences are that, with a reverse mortgage, there are no monthly mortgage payments. Currently there are no income or credit score requirements either and the homeowner will never be liable to the lender for any amount that exceeds the value of the home.
Q. So I can never owe more than my home is worth. Is that true?
A: Yes, you will never owe more than the home is worth. All reverse mortgage are non-recourse loans. Homeowners do need to continue to pay property taxes, homeowners insurance and keep the property maintained. Homeowners are also responsible for their own utility bills such as gas and/or electric.
Q.What if I already have a mortgage on my home?
A: Reverse Mortgages are designed to eliminate any monthly mortgage payments. If you currently have a mortgage the proceeds from the reverse mortgage will pay off the existing mortgage and the remaining proceeds of the reverse mortgage are available to you to use.
Q. Do I have to pay taxes on the cash I receive from a reverse mortgage?
A: Currently the IRS treats money received from a reverse mortgage as a loan and not taxable income. We always recommend that you speak with your tax adviser or call to Talk to a Reverse Mortgage Banker today to tell us about your specific situation.
Q. My home is in a living trust. Can I still get a reverse mortgage?
A: Homes in living trusts are usually able to take out a reverse mortgage subject to review of the trust documents.
Q.Can I lose government assistance by choosing a reverse mortgage?
A: The proceeds from a Reverse Mortgage do not affect Social Security or Medicare benefits; however, if you are on Medicaid, any proceeds from a reverse mortgage that your receive must be used immediately. Cash not used could be counted as an asset and could possible affect Medicaid eligibility. We always recommend that you speak with your financial adviser or call to Talk to a Reverse Mortgage Expert today to tell us about your specific situation.
Q.Can the lender or bank take my house?
A: Absolutely NOT! The title remains in the name of the borrowers(s) and as long as at least one of the borrowers lives in the home and keeps the taxes and insurance current as well as maintains the property, there is no need to repay a reverse mortgage.
Q.When will the loan become due?
A: The loan becomes due and payable when the last remaining borrower permanently leaves the home, sells the property or passes away. Until then you live in the home with no mortgage payments due.
Q.What is due when the loan is repaid?
The total due will include any amounts that were disbursed to the homeowner(s) as well as any interest that has accrued. Additional surplus is disbursed to you or heirs.
Q.Will my heirs have to sell the property to repay the reverse mortgage loan?
A: No, the home does not have to be sold. Your heirs can refinance the reverse mortgage into a traditional (forward) mortgage; the same type that is on most homes. If the heirs choose to sell the home and the proceeds exceed the amount of the home, they can keep the difference. The choice is theirs. In cases where the proceeds are not enough to pay off the loan, the bank absorbs the difference. If the heirs decide to keep the property finance the existing mortgage regardless of the homes value at that time.
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