Questions
and Answers
- What
is a Reverse Mortgage?
- How
do I qualify for a Reverse Mortgage?
- What
if there is an existing mortgage or loan on my home?
- How
Much Money Can I Receive from a Reverse Mortgage?
- How
can I receive the money?
- How
can I use the money I receive?
- What
Costs are Involved with a Reverse Mortgage?
- How
is interest charged?
- Will
the income from the Reverse Mortgage affect my Social Security
or Medicare benefits?
- When
is the Reverse Mortgage due and payable?
- Do
I continue to own my home?
- How
do I get started?
What
is a Reverse Mortgage? back to top
A reverse mortgage is a special type of loan, which enables you
to convert the equity in your home into tax-free cash. You may receive
the money in the form of a lump sum, monthly payments, a line of
credit, or a combination of these options. There are no income,
employment or credit qualifications and there are no monthly payments
to make. The loan is not repaid until you permanently leave your
home. Reverse Mortgages are backed by the U.S. Government or major
financial institutions.
How
do I qualify for a Reverse Mortgage? back to top
You and any co-borrower must be at least 62 years of age, own your
home, and occupy the home as your primary residence.
What
if there is an existing mortgage or loan on my home? back to top
An existing mortgage or loan must be paid off. The reverse mortgage
is often used to pay off these existing loans.
How
Much Money Can I Receive from a Reverse Mortgage? back to top
The amount of money you can receive is determined by the value of
your home, the age of the youngest borrower and the current interest
rate. We will help you in evaluating your options and calculate
the maximum amount of money that will be available to you. Feel
free to call us at 1-800-690-2836 for a Free Evaluation.
How
can I receive the money? back to top
You can receive your money as a lump sum in cash(all at once), monthly
payments or a line of credit. You can also do a combination of these
options. We will help you decide which option works best for you.
Note: you can change the way you receive your money as often as
you like for a small fee.
How
can I use the money I receive? back to top
You can use the money any way you choose:
- Supplement
your income / pay for monthly expenses
- Home improvements
- Pay off a
current mortgage and other debt Medical bills
- Long Term
Care Insurance or other insurance products
- Buy a new
car
- Travel
- Gifts for
your grandchildren or family
- Purchase
a new home
There are absolutely
no restrictions on what you can do with your money.
What Costs are Involved with a Reverse Mortgage? back to top
Reverse Mortgages have costs just like forward mortgages. These typically include an appraisal, loan origination fee, title insurance and recording fees. Most of these can be financed into the loan so you do not need to pay for them out of pocket. The U.S. Government insured loan program also has a FHA (Federal Housing Administration) insurance premium. We are happy to go over and explain each cost with you as well as provide a good-faith estimate.
How
is interest charged? back to top
Reverse Mortgages are adjustable rate mortgages (ARM) and are tied
to market indexes. The initial rate is set at closing and then either
adjusts monthly or annually. These rates do not affect monthly payments
and only your outstanding loan balance is subject to interest. A
change in interest rates will not affect the amount or number of
loan advances that you can receive, but it will cause the loan balance
to grow at a faster or slower rate. We understand this may be confusing
and are happy to explain each option with you. The following shows
how rates are set for the Home Equity Conversion Mortgage (HECM).
Monthly Adjustable
Rate: 1-Year U.S. Treasury Security Rate + Margin. There is no limit
on how much the rate can change by each month and there is a lifetime
interest rate cap equal to 10% above the initial interest rate.
Annual Adjustable
Rate: 1-Year U.S. Treasury Security Rate + 2.1% There is a 2% limit
on how much the interest rate can change by each year and a lifetime
interest rate cap equal to 5% above the initial interest rate.
Will the income from the Reverse Mortgage affect my Social Security or Medicare benefits? back to top
Reverse Mortgage income is tax-free and will not affect Social Security
or Medicare benefits. Other benefits can be affected and we suggest
that you contact your local Area
Agency on Aging (AAA) at 1-800-677-1116 for specifics.
When is the Reverse Mortgage due and payable? back to top
When the borrower permanently leaves the home, the reverse mortgage is due and payable. You or your heirs will have the option to sell or refinance the home and keep any remaining equity.
Do I continue to own my home? back to top
Yes, you retain full ownership of your home when you obtain a reverse mortgage. As with any mortgage, the lender has a lien against your property. When the loan is repaid any remaining equity stays with the homeowner or their heirs.
How
do I get started? back
to top
Get started by calling us to discuss your situation and needs. We
are committed to helping you through the reverse mortgage process
and are happy to visit with you at your convenience.
Toll Free: 1-800-690-2836
Phone: 1-415-946-8202 ● Fax: 1-415-946-8230
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