FAQs - Frequently Asked Questions

What are some of the ways which your clients have used the money?

The options are endless, but some of our clients have had the following uses:

How does a Reverse Mortgage work if I currently have a Conventional Mortgage?

Simple. The funds from the Reverse Mortgage are used to pay off your primary mortgage. Once that’s done, the remaining funds are yours to do with as you wish.

What are the tax ramifications?

Since Reverse Mortgages are considered loan advances, they are not generally considered as taxable income. However, it is still prudent to check with your tax advisor regarding your own individual tax situation.

Will this interfere with my Medicaid or Social Security payments?

Since this is considered a loan it shouldn’t interfere with these other benefits, particularly if monies are spent and not accumulated. However, each individual’s situation is different and it is recommended you check with your Accountant or Financial Advisor for specifics on your individual situation.

How does the line of credit work?

You are provided access to a line of credit to be withdrawn at will. Having this line of credit pre-established enables you to receive money as needed. Interest is only charged on the money actually used.

Is there interest on the loan?

Yes. As with a conventional mortgage, Reverse Mortgages contain interest charges. However, since this is a Government backed HUD program, the interest charged is generally less than a standard mortgage.

Why wouldn’t I just take out a standard mortgage?

There are several reasons why a Reverse Mortgage would be preferable over a conventional mortgage:

These loans are government backed. How is the government involved with these loans?

Most Reverse Mortgages are FHA insured. In order to obtain a Reverse Mortgage, FHA also requires you to meet with an independent, government sponsored counselor prior to making your decision.

Will we ever owe more on this Reverse Mortgage than our home is worth?

Absolutely not. These loans have a non-recourse clause. Simply stated, you and your heirs will never owe more than the value of your home, no matter how long you live.

Do we retain ownership in the home?

Yes. You maintain full ownership of your home. The home’s title remains in your name. You are still responsible for property taxes and homeowner’s insurance.

What if I have a Living Trust?

It is very common for a Living Trust and a Reverse Mortgage to operate together. The only stipulation is that your Trust must meet HUD’s requirements. It would be prudent to have your trust advisor review the documents in order to make sure they are coordinated properly.

How can I receive the money?

The choice is yours. You can choose from the following options:

How much money do I qualify for?

No two loans are alike. The amount you can receive is based on your age, the value of your home, the county in which you live, and the current interest rate. Our Loan Advisors will meet with you individually in order to assess your potential equity.

What costs are associated with a Reverse Mortgage?

Just like a conventional mortgage, the fees associated with a Reverse Mortgage include title insurance, an appraisal fee, a loan origination fee, recording fees and escrow costs. Most people include these fees in the loan itself, and therefore are not out of pocket any money at time of closing.