Frequently Asked Questions
Q: What is a Reverse Mortgage?
A: The U.S. Department of Housing and Development (HUD) created reverse
mortgages to give older Americans a greater sense of financial security.
A reverse mortgage is a specialized loan that enables senior homeowners
(62 years or older) to convert home equity into tax-free income without
having to sell the home, give up the title or take on a new monthly mortgage
payment. The income received from a reverse mortgage can be used for anything,
including; supplementing retirement income, home improvements, health
care expenses, paying off debt, vacations, property taxes and preventing
foreclosure. Unlike a traditional home equity loan or second mortgage,
no repayment is required until the borrowers no longer use the home as
their principal residence. With a reverse mortgage, you remain the owner
of your home just like when you had a standard mortgage. You are still
responsible for paying your property taxes and home-owner insurance and
for making property repairs.
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Q: How do I qualify?
A: To qualify for a reverse mortgage:
- you must be at least 62 years old. In the case of a couple or co-owners,
both must be 62 if their names appear on the title to the home.
- you must have equity in your home. You may qualify even if you have an
outstanding balance on your first mortgage.
- you must reside in a single family dwelling, townhouse, condominium, detached
home, or certain manufactured homes.
- 1-4 family, co-op, second homes and “Gentleman” farms
are also eligible for some programs.
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Q: How can I receive my money?
A: The tax-free income you receive from a reverse mortgage can be paid
to you in several ways including:
- all at once, in a single lump sum.
- as a monthly cash advance
- as a line of credit that lets you decide when and how much of
your cash is paid to you
- as a combination of these payment methods.
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Q: Will the income affect my Social Security, Medicare or other benefits?
A: Social Security and Medicare benefits are not affected. Supplemental
Security Income (SSI) and Medicaid are not affected either, as long as
all monthly cash advances are fully spent each month.
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Q: Are there restrictions on what I can do with the money?
A: You can use the reverse mortgage income on anything you choose including;
supplementing retirement income, home improvements, health care expenses,
paying off debt, vacations, property taxes and preventing foreclosure.
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Q: When do I need to repay the loan?
A: You do not need to repay the loan as long as you or one of the borrowers
continues to live in the house and keeps the taxes and insurance current.
You can never owe more than your home's value. Once you sell your home
or no longer use it for your primary residence, you or your estate will
repay the cash you received from the reverse mortgage, plus interest and
other fees, to the lender. The remaining equity in your home belongs to
you or to your heirs. The debt will never be passed along to the estate
or heirs.
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