Reverse Mortgage FAQQuestions and Answers About Reverse Mortgages
Have questions about the reverse mortgage process? Read through our reverse mortgage FAQ to get answers. Who can qualify for a reverse mortgage?In order to qualify for a reverse mortgage, you must meet the following criteria.
There are a variety of reverse mortgage options to choose from. Make sure to meet with a qualified lending professional to explore your options. Read through the additional reverse mortgage information provided on this site and others to gain a better understanding of the loan options available to you. Can I qualify for a reverse mortgage if I already have a home mortgage?Yes. Any existing mortgages you currently own will be eliminated when you start your reverse mortgage. This, in fact, is another useful purpose that reverse mortgages serve. Can I use a reverse mortgage to pull equity from a vacation home?No. Reverse mortgages are designed to help seniors remain in their homes and keep up an income stream. You must live in the residence. Is reverse mortgage counseling required or optional?It’s required. All borrowers who wish to take out a reverse mortgage must attend mandatory reverse mortgage counseling. You can find local reverse mortgage counselors by filling out a brief form on the HUD website. Is any of the money acquired from a reverse mortgage taxable?No, the IRS does not apply a tax to any of the money received from a reverse mortgage. If I have placed the home in a living trust, can I still qualify for a reverse mortgage?You will need to have an attorney review the particular trust documents. Different trusts operate in different ways. If the trust meets the criteria designated by the HUD, you can apply for a reverse mortgage. If not, the home must be removed from the trust before you can apply. Will a reverse mortgage negatively affect my ability to receive a pension, Medicare, Social Security, or any other benefits?A reverse mortgage will not affect your pension, Social Security, or Medicare benefits. If you are on Medicaid, though, you will need to be cautious. You may lose your Medicaid eligibility if you maintain $2,000 or more of liquid assets from month to month. If, however, you spend the entirety of your reverse mortgage payment each month, none of your benefits will be affected. Are there any upfront costs associated with reverse mortgages?There are upfront costs you must pay to close the loan. This is true of any mortgage. Reverse mortgages, due to their unique nature, can be slightly more expensive than traditional mortgages. Refer to our reverse mortgage checklist for more information about the application process. Will the reverse mortgage lender repossess my home?Your lender will never repossess your home. The lender you work with does not obtain the title or deed of ownership to your home under any circumstances. Upon your death, ownership of the home and responsibility for the mortgage amount will pass to your heirs. Will I have to make any payments for my home on an ongoing basis?Your current mortgage will be paid for in whole by the reverse mortgage. You won’t have to make any mortgage payments of any kind. You will still need to pay for home insurance and your property taxes on an ongoing basis, and you’ll probably need to pay a servicing fee to your lender each month. Will I have to pay back my reverse mortgage?Not necessarily. You won’t have to repay your loan amount unless you permanently leave your residence or sell your home. Upon your death, the responsibility to pay back the mortgage will pass to your heirs along with ownership of the home. Your heirs can then sell the home to pay back the mortgage amount or refinance the mortgage and pay it off out of pocket if they wish to keep the home. Can my family keep my home?Yes. As mentioned above, if you wish to keep the home in your estate, your heirs can refinance the reverse mortgage and pay it off over time while living in or renting the home. These questions and answers will help you decide whether a reverse mortgage is right for you. |
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