Q: Exactly what is a Reverse Mortgage?
A: This is a Federal Government (HUD) sponsored mortgage loan that
enables
you, as a senior homeowner (age 62 and older), to tap into the equity
you
have in your home while giving you the maximum amount of flexibility
to
address your particular financial needs. You may choose a lump sum
amount to
pay off debt, fix up your home or for any other reason. You may wish
to
receive regular monthly payments to supplement your income or choose
a line
of credit that you can access at your convenience. It may be possible
to
combine the lump sum cash, monthly payment and the credit line options
if
that fits your needs, provided you have sufficient equity in your
home.
Q: How does a Reverse Mortgage differ from a regular home equity
loan?
A: While both types of loans enable you to turn the equity in your
home
into spendable dollars, there are some important differences. With
a home
equity loan, you must make regular payments to repay the debt. These
repayments to the lender begin immediately. To qualify for a regular
equity
loan, you must have a monthly income large enough to meet the lender's
criteria. If you fail to make your payments, the lender can foreclose
and
you may be forced to sell your home. Also, you may have to re-qualify
for a
home equity loan each year. If you fail to re-qualify, the lender
can
demand payment in-full.
With a Reverse Mortgage you do not repay the loan as long as the home
remains your principal residence. Neither your income nor your credit
is
considered when qualifying for the loan. Reverse Mortgage lenders
are only
concerned with the current market value of your home, the amount of
equity
you have and a clear title.
Q: Who is eligible for a Reverse Mortgage?
A: Borrowers and co-borrowers must be at least 62 years old. The home
must be owner occupied by at least one borrower. The home should have
no
more debt than could be paid off from the proceeds of the new Reverse
Mortgage. You must also agree to accept (free of charge) mortgage
counseling from a HUD approved counseling agency. We encourage family
members, friends and/or other advisors to attend this one time session
with
you. Certain circumstances allow this counseling session to be conducted
over the telephone.
Q: What are the minimum and maximum amounts that I can borrow?
A: There is no minimum borrowing amount. The Reverse Mortgage factors
in
the age of the youngest borrower, the expected interest rate and the
"maximum claim amount" which is the lesser of the appraised
value or the
maximum loan amount for a residence in your area as determined by
FHA.
There is no upward limit on the true market value of your home.
Q: Will I have to pay fees to obtain a Reverse Mortgage?
A: Yes. But your out-of-pocket expense is only $300 which can be financed
into the loan with all other normal closing costs and paid back to
you at
closing.
Q: Are there any ongoing fees after closing?
A: Yes. There is an annual insurance fee and a $30 monthly servicing
fee.
These fees are added to your loan balance as the charges occur.
Q: Can I be forced to sell or vacate my home if the loan balance
owed ever
exceeds the value of my home?
A: Absolutely not as long as you continue to occupy the property as
your
principal residence.
Q: Will my heirs owe anything to the mortgage lender if I die?
A: Upon your death, the loan balance, consisting of money paid to
you plus
accrued interest, becomes due and payable. Your estate may choose
to repay
the loan by selling the property or pay it off by other means so they
can
keep the home. If the loan should exceed the value of the property,
your
estate will never owe more than the value of the property. No additional
financial claims may be made against your heirs or estate. You will
never
owe more than your property is worth!
Q: If my home appreciates in value during the mortgage term, who
is
entitled to that money?
A: Any money remaining after the mortgage is paid belongs to you,
your
heirs or your estate.
