Frequently Asked Questions
What is an FHA Reverse Mortgage?
An FHA reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), is a loan insured by the United States Federal Government's Federal Housing Administration
How are my fees and reverse mortgage interest rates calculated?
Reverse mortgage rate are tied to fixed or variable interest rates loan, as well as a margin and index and the fees are calculated according to loan program. We as your Mortgage Professional can provide you an exact fees and interest rates according to what it would be for your particular situation. Please give us a call today for an individualized consultation based on your particular situation
What are my payment obligations with a reverse mortgage?
During your Reverse Mortgage loan period, your obligations are to continue to pay for your home insurance, property taxes and basic home maintenance. You can make a loan payment if you desire.
How would I receive my reverse mortgage funds, and how is the loan length determined?
The length of the loan is determined upon what disbursement option you choose. You may receive:Combination of, full or partial lump sum line of credit Monthly Payments (tenure or modified tenure plan).The choice is ultimately yours, We as a Reverse Mortgage Professional can help you decide on the disbursement method that is the best option for your unique situation. Remember, you have the option to change your disbursement method at any time.
Is a reverse mortgage a last resort option only? Are reverse mortgages only for desperate and poor seniors?
No, Reverse mortgage can be a very powerful and intelligent strategic financial planning tool. There is no better product more readily available to the senior population in terms of supplementing retirement income and managing retirement risks. However, the reverse mortgage should be evaluated and customized to your particular need. This is where we as your Reverse Mortgage Professional comes in, to provide you and your loved ones with all the information need for to make the best possible options in your particular situation.
How will the reverse mortgage loan eventually be repaid?
Reverse Mortgage loan is repaid when the last borrower leaves the home or passes away. What normally happens is that the home is sold and the proceeds pay back the reverse mortgage loan. Any remaining equity after the loan is repaid goes to you or your heirs. If your heirs choose to keep the home instead, they can pay back the reverse mortgage loan in other ways, such as refinancing the reverse mortgage to a conventional mortgage loan.
What are the benefits of a reverse mortgage?
Some of the benefits of a reverse mortgageare you can never owe more than the value of your home, as long as you reside in your home you do not have to make payments on the loan. You will not lose Social Security or Medicare benefits. You are afforded greater financial freedom and control, providing you with security and dignity.
What happens if my home gains value?
When your home gains value, then your equity increases. If your home is sold and the reverse mortgage is paid back, there will also be more funds left over that would go to you or your heirs. You also have the option to refinance to pull out the additional gained equity in your home
What can I use my reverse mortgage funds for?
Pay off existing mortgages.
Paying debts, credit cards & medical Bills
Home repair and improvement expenses
Increasing cash flow via line of credit Monthly Payments
Helping family members and spoiling grandchildren
Having fun and enjoying retirement
What happens if I pass away during my reverse mortgage loan before I receive the full amount of my loan?
Any part of your loan that hasn't yet been sent to you remains as equity in the home that becomes part of your estate. What happens after death is that it becomes and the heirs are usually given about 12 months to sell the home. They may also keep the home by paying off the reverse mortgage loan. Otherwise, the home is sold and the proceeds first pays off the reverse mortgage loan, and the rest goes to the heirs
Will a reverse mortgage affect my Social Security, Medicare, or pension benefits?
No, these benefits will not be impacted, as a Reverse Mortgage is considered loan proceeds and not income. However, Medicaid and SSI may possibly be affected.
What if I outlive the loan? Will my loan become due?
The loan is not due unless you default on paying any of your obligations such as taxes, insurance, and basic maintenance. But if you fulfill these obligations, you may continue living in the home for as long as you wish without making payments towards the loan
Potential borrowers considering this option have a lot of questions, and they want to be very clear about what a reverse mortgage for seniors is. For some senior homeowners today, the answer may still be a little unclear. Below is some information on reverse mortgages for seniors.
- A borrower may pull the equity in their home and convert it into cash to then use it for whatever they wish
- Even if you have already closed one in the past, you can still get the lower interest rates of today by refinancing a reverse mortgage.
- Although your home is usually used to pay back your loan, your heirs can still inherit your home.
- Potential borrowers learn even more from their loan officer, who will thoroughly explain what a reverse mortgage loan is for you and your family.
- The reverse mortgage equity requirement is influenced by the age of the borrower, the home value, and equity amount. In general, the older you are, the more your home is worth, and the less you owe on a mortgage, then the more you may get with a reverse mortgage loan.
Reverse mortgages have been helping senior homeowners for more than fifty years. Transforming seniors’ equity to work for them has become a simple reverse mortgage definition, in addition to its basis and the reason for its foundation, and it may help you too. Fortunately, you can get the reverse mortgage info you need to determine if it is the right financial tool for you.