Reverse Mortgages are home loans for senior homeowner’s looking¬†to tap into the equity in their home without having to sell it.¬†More often than not, a lack of information and education, hinders their ability to make a decision that can greatly increase their quality of living throughout their retirement. Some of the most common reverse mortgage questions and misconceptions are addressed here.

Does the Bank own my home if I get a Reverse Mortgage?

The answer is NO!! A reverse Mortgage is a first and only lien on the property( In most cases, two(2) notes are signed, one(1) for the bank funding the loan and one(1) for the Federal Housing Administration(FHA) who insures the loan in case of lender default). The property is, and will always be owned, deeded, to the homeowner as long as they are alive and occupying the property as their primary residence, maintaining the property in living condition, paying the taxes and the homeowners insurance along with the Homeowners association fee if applicable.

Do I have to make any payments on a Reverse Mortgage?

It is not a requirement to make payments on a Reverse Mortgage, but, as previously discussed, property taxes, homeowners Insurance and the homeowners association fees must be paid in a timely fashion. Also, maintaining the property in living condition is another requirement.

What happens to my home when I pass away?

At the time of death of the last surviving spouse on the Reverse Mortgage, the heirs to your property/estate have three(3) options. 1) Sell the home to pay off the Reverse Mortgage and keep the remaining monies from the proceeds, if available. 2) Refinance or pay off the existing loan with another loan or available funds. 3) Surrender the home to the bank holding the current lien on the Reverse Mortgage. * It is important to know that most lenders allow one(1) year to accomplish any of the above options.

Is a Reverse Mortgage a Non-recourse loan?

Yes, an FHA insured Reverse Mortgage is a Non-recourse loan. A Non-recourse loan, by definition, is a secured loan or debt that is secured by a pledge of collateral , typically Real Estate, for which the borrower is not personally liable. If the borrower defaults, the Lender/issuer can seize the property, but the lender’s recovery is limited to the property. In short, debt will not be passed along to the estate or heirs on a Reverse Mortgage.

Will a Reverse Mortgage affect my social security and medicare?

No, a Reverse mortgage does not affect regular social security or medicare benefits. However, if you are on Medicaid or Supplemental Security Income(SSI), any reverse Mortgage proceeds must be used immediately.

What type of properties Qualify for a Reverse Mortgage?

Eligible property types include single family residences, 2-4 Unit properties, Manufactured homes (built after June 1976 with certain conditions), Condominiums and Townhouses that fall within certain guidelines. Co-ops do not qualify for Reverse Mortgages.

How can I receive the proceeds from a Reverse Mortgage?

There are four(4) options to receive the funds. 1) All at once in the form of a lump sum. 2) monthly payments for a set term or as long as you live in the home. 3) As a Home Equity Line of Credit. 4) As a combination of the three (3).

What can I use the proceeds from a Reverse Mortgage for?

You can use the proceeds for anything including paying off debts , repairs on your home, supplement your income to cover daily living expenses, help with health care, medical bills, property taxes and even prevent foreclosure.

Is there a Prepayment Penalty on a Reverse Mortgage?

No, an FHA insured Reverse Mortgage can paid off at any time without a penalty!!!