When you have a reverse mortgage, who owns your house (whose name is on the title/deed)?
You remain the owner of your property at all times. There is no change to the deed or title of your home when completing a reverse mortgage.
Which payment option do you think will best meet my needs?
It depends on your situation. Our trained loan officers have helped hundreds of seniors pick the best option for their personal situation. You can do a lump sum payment, ongoing monthly payments, or you may also choose a line of credit allowing you to access your money as you need it. Your line of credit will be guaranteed to grow every year that you don’t use it.
What happens if I change my mind later and want to change my payment plan?
As long as you still have money available to borrow from your reverse mortgage, you can change your disbursement option for a small, one-time fee. Remember, when the value of the loan is higher than the home value, it does not trigger an early payoff or due date.
Am I required to make a monthly payment to the bank?
No, but for tax or cash-flow purposes, including Medicaid planning, you may wish to do so.
When does the reverse mortgage have to be paid back?
Your reverse mortgage will become due when one of these things happen:
1. You sell your home.
2. You permanently move out of your home.
3. The last person on the title passes away. Your heirs will have two options. They can choose to sell the property, pay off the reverse mortgage balance and keep any remaining equity, or they can choose to keep the property by refinancing the balance of your reverse mortgage with a new mortgage in their name. Remember, if the loan balance ever exceeds the home value, it does NOT trigger an early payoff or cause you to have to move out of your home.
What basic responsibilities will I continue to have after I get a reverse mortgage?
The homeowner remains responsible for the payment of annual property taxes and homeowner’s insurance as well as basic upkeep of the property.
What happens if I do not keep up with these responsibilities as a borrower?
If you do not continue to do these three basic things, the lender is required by HUD to foreclose.
If all of the money from the reverse mortgage was taken out in a lump sum and spent in full, would the homeowner be able to keep living in that home?
Yes, your reverse mortgage will not become due until you pass away, sell your home, or are no longer living in the home. If you use all of the available proceeds, you will not have any more money available and interest would accrue until one of the three events referenced above occurred.
What happens if, at any time, the amount I owe under a reverse mortgage is greater than what the home is worth?
Nothing as long as you still live in your home.
What if I live in Florida for half the year?
That’s fine, you just need to live in your primary residence for six months and a day.
How does a reverse mortgage change the amount of money I leave to my children (or other heirs)?
Most likely, it will decrease the amount of money the heirs will receive from the value of the home. However, your overall net worth will likely improve because you will not spend as much from your other accounts.
Will my children receive more or less after I pass away than they would without the reverse mortgage?
It depends on what you do with your overall finances. Most families will receive more by being more efficient with the use of their entire portfolio of assets.
What if I go into a nursing home?
As long as you are simply rehabilitating and getting better, your home and reverse mortgage are still yours until two doctors agree it is impossible for you to ever return to your home.
If I refinance my current HECM (reverse mortgage), will I still be required to may mortgage insurance?
In general, mortgage insurance is paid for with an “up-front” premium, which is included with your closing costs and a monthly premium that is added to your loan balance each month. When you refinance a reverse mortgage, you will receive credit for the up-front premium you paid on the original loan; you will only have to pay mortgage insurance on the increased value of your home since you took out the original HECM.
What are the additional costs incurred with a refinance?
Other than the reduced up-front mortgage insurance premium, closing costs associated with a HECM refinance are the same or lower as on your original loan. You may be charged an origination fee and all other third-party costs (appraisal, title insurance, etc.).
If a home is purchased with a HECM, will the HECM be held on the existing home or newly purchased home?
The HECM will be held on the newly purchased home as your primary residence. The down payment you will need to bring to closing is usually between 30-50%.
How does a lender determine how much money is needed at closing?
The down payment you will need to bring to closing will be determined based on your age, current interest rates and the sales price (or appraised value, whichever is less) of the home you are buying.
What sources of funds (money) are allowed to be used in purchasing a home with reverse mortgage?
The money must come from your own liquid assets (bank accounts, CD’s, retirement accounts, etc.) or from the documented sale of other assets you may have (your present home for example).
Why is my down payment higher with a reverse mortgage?
Your down payment is higher initially because you will never be required to make a monthly payment (except for taxes, insurance, and maintenance). Having a traditional mortgage will cause you to lose much more in cash flow over time because of the consistent required payments.