Reverse Mortgages FAQs
Reverse Mortgages – Frequently Asked Questions (FAQs)
- Can I get a Reverse Mortgage if I currently have a mortgage or equity loan on my home?
- Do I give up ownership of my home when I get a Reverse Mortgage?
- When does the Reverse Mortgage come due?
- What are my responsibilities as a homeowner with a Reverse Mortgage?
- Are Reverse Mortgages only for people with financial problems?
- Can I still leave my home to my heirs if I have a Reverse Mortgage.
- Could my estate or my children be personally liable with a Reverse Mortgage?
- What happens if my spouse passes away?
- Are any restrictions on what I can use the money from a Reverse Mortgage for?
- Are there any “out of pocket” costs for me to pay to get a Reverse Mortgage?
- Will my children be against me doing a Reverse Mortgage?
- What if I decide to sell my home after I get a Reverse Mortgage.
Q. Can I get a Reverse Mortgage if I currently have a mortgage or equity loan on my home?
A. Yes. Any existing mortgages or equity loans will be paid off at closing. Getting rid of a monthly payment will free up a large portion of your income to be used for other things.
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Q. Do I give up ownership of my home when I get a Reverse Mortgage?
A. Absolutely not. A Reverse Mortgage is just a lien on the property. The title remains in the name of the borrower(s).
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Q. When does the Reverse Mortgage come due?
A. The Reverse Mortgage does not become due until all borrowers on title have either passed away or moved out of the home permanently.
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Q. What are my responsibilities as a homeowner with a Reverse Mortgage?
A. You are required to pay your property taxes and homeowners insurance and of course to maintain your home.
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Q. Are Reverse Mortgages only for people with financial problems?
A. No. The Reverse Mortgage is an excellent financial planning tool that is used by homeowners from all walks of life to enhance their retirement years. This is evidenced that there are over 10,000 Reverse Mortgages being done each month.
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Q. Can I still leave my home to my heirs if I have a Reverse Mortgage.
A. Yes. The Reverse Mortgage is just a lien on the home. You can leave the home to anyone you choose. They will just have to make arrangements to pay off the loan or refinance into a conventional loan if they want to keep the home or they can sell the home and keep the amount of money that is remaining after the Reverse Mortgage is paid off.
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Q. Could my estate or my children be personally liable with a Reverse Mortgage?
A. No. The Reverse Mortgage is a “non-recourse” loan. What this means that no one can be liable for the loan. Only the house “stands for the debt”. That means only the proceeds from the sale of the home can be used to repay the Reverse Mortgage.
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Q. What happens if my spouse passes away?
A. The Reverse Mortgage does not become due until both spouses have passed away or permanently move out of the home.
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Q. Are there any restrictions on what I can use the money from a Reverse Mortgage for?
A. No. Its your money. You can do whatever you want with it. Its been very common for seniors to use the proceeds to eliminate debt like mortgages and credit cards. Many others are using them to supplement their monthly income to help pay daily living expenses, health care bills, prescription drugs, and making home repairs. Lately, many seniors just want to put the money in the bank and leave it there for an emergency fund.
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Q. Are there any “out of pocket” costs for me to pay to get a Reverse Mortgage?
A. All of the costs can be financed into the Reverse Mortgage. The only fee you may have to pay for is the counseling fee. FHA requires the borrower to pay the $125 counseling fee directly to the counseling agency. However, the counseling agency may allow you to have it paid out of the closing proceeds.
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Q. Will my children be against me doing a Reverse Mortgage?
A. Experience shows that children are supportive of their parents doing a Reverse Mortgage. Also, a Reverse Mortgage offers the freedom to assist your children financially today and avoid the potential of burdening them with your expenses.
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Q. What if I decide to sell my home after I get a Reverse Mortgage.
A. Even though you have a Reverse Mortgage, you can still sell your home. The proceeds from the sale will go first to paying off the Reverse Mortgage and the remainder belongs to you.
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