|
|
Frequently Asked Questions
Q. What is a reverse mortgage?
A reverse mortgage allows a homeowner to turn the equity in their home to monthly income or lump-sum cash, both tax free. No payment is required as long as you live and maintain the home as your primary residence.
Q. How do I qualify?
The applicant(s) must be 62 years of age or above and own a home. There is no credit, no income and no health requirements.
Q. How much money can I receive?
The amount available is based on several factors: your age, home value, current interest rates and the specific plan you choose. Generally speaking, the older you are, the higher the value of the home, the more money is available.
Q. Who really owns my home?
You do. A reverse mortgage is just a lien similar to a traditional mortgage. You can sell your home at any time.
Q. Is there more than one reverse mortgage?
Yes, there are six. The majority of reverse mortgages issued are the FHA (Federal Housing Administration) "Home Equity Conversion Mortgage" (HECM). They are federally insured and come in two options, the monthly adjustable option and the annually adjustable option. "Fannie Mae" (FNMA) offers "Home Keeper" mortgage and there are also three proprietary reverse mortgages for higher valued homes.
Q. Do I have to pay income tax on the proceeds?
Proceeds received from a reverse mortgage are loan advances and not taxable income. For your specific situation, we recommend that your consult your tax advisor.
Q. 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. And reverse mortgages are "non-recourse" mortgages so a debt cannot be passed to your heirs as a result of doing an FHA insured reverse mortgage.
Q. Can a person ever lose their home?
Never. As long as the home remains the borrower’s primary residence and you keep the home insured and your property taxes current.
Q. Who gets my home after my death?
Your estate does. Your heirs have the choice of keeping or selling the house. If they decide to sell the home, the proceeds of the sale would be used to repay the mortgage, with the remainder going to your heirs.
Q. Will this income affect my Social Security or Medicare benefits?
No. Money from a reverse mortgage is not considered income, nor does it affect Social Security or Medicare. Homeowners on SSI or Medicaid should observe pertinent rules.
|
|
