Q. Who are reverse mortgages designed for?
A. They are designed for homeowners at least 62 years of age with significant equity
in their homes.
Q. Can a reverse mortgage be taken out if there is already a conventional
mortgage on the home?
A. Yes, but any existing mortgages must be paid off at closing. The proceeds from
the reverse mortgage may be used for that purpose.
Q. What types of homes won't qualify for a reverse mortgage?
A. Generally vacation homes or other secondary residences, mobile or
manufactured homes not attached to a permanent foundation, rental properties of more
than four units and homes on leased lands do not qualify.
Q. What about a home in a "living trust?"
A. A homeowner who has put the home in a living trust can usually take out a
reverse mortgage, subject to review of the trust documents.
Q. Will I have any tax liability for the reverse mortgage proceeds?
A. Currently the Internal Revenue Service treats monies received from a reverse
mortgage to be loan advances and not taxable income. For your specific situation, we
recommend that you consult your tax advisor.
Q. Can the interest charged on my loan principal be deducted for tax
purposes?
A. The interest accrues and is deductible when the loan balance and interest is
repaid, when the borrower permanently leaves the property. For your specific situation,
we recommend that you consult your tax advisor.
Q. How do the monies from a reverse mortgage affect Social Security,
Medicare or pension benefits?
A. The proceeds from a reverse mortgage do not affect these benefits. For your
specific situation, we recommend that you consult your financial advisor.
Q. If I take out a reverse mortgage will my SSI or Medicaid benefits be
affected?
A. No, A reverse mortgage will not affect these or most other means tested benefits
as long as the monthly cash advances are fully spent every month and not accumulated.
Programs do vary by state so it's advisable to check with the local Area Agency on Aging.
We also recommend that you consult your financial advisor.
Q. What are the upfront costs associated with a reverse mortgage?
A. The borrower will pay an origination fee and actual closing costs, including
charges by the title and escrow companies. All of these costs can be financed as part of
the initial loan advance.
Q. What is due when the loan is repaid?
A. The borrower pays back the cash advances they have received plus accumulated
interest.
Q. What if I owe more than my home is worth?
A. All reverse mortgages are "non-recourse" loans, which means that the borrower
can never owe more than the value of the home regardless of loan balance.
Q. Does the lender take the house?
A. This is a misconception; a reverse mortgage is merely a loan against the
property. The title remains in the name of the borrower and the lender is only repaid the
loan balance or the home value which ever is less.
Q. If there are no payments, what are my responsibilities as a borrower with
a reverse mortgage?
A. You are required to pay your property taxes, keep current property insurance in
place, maintain the home, and notify the lender if you will be away from the property for
an extended period.
Q. When does the loan become due and payable?
A. The loan is due and payable when the borrower sells the property, permanently
leaves the home, or passes away. In the case of a couple, it is the second to move out or
die that triggers repayment. Until these events take place you live in the home and make
no payments to the lender.
Q. Do I or my heirs have to sell the property to repay the loan?
A. No, repayment can be accomplished by a refinancing of the existing reverse
mortgage by a conventional mortgage loan.
If you have any more questions please contact me to learn more.
Call me direct, toll free at (888) 261-5990, email me at jim@reversemortgagefunding.net or click on the "Request a Quote" button and we will send you a free profile of what you might be able to receive from a reverse mortgage. There is no obligation!