Reverse Mortgages

What is a Reverse Mortgage?
A reverse mortgage is a loan against the equity in your home that does not require repayment as long as the home continues to be your primary residence.

 

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Criteria for Eligibility: Reverse Mortgage

  • Must be 62 years of age or older
  • No income qualification
  • No monthly mortgage payments are made
  • No repayment of the loan until the last borrower moves out permanently
  • Proceeds are tax-free
  • Interest may be tax-deductible upon loan repayment, please consult a tax advisor

Loan proceeds are available to the borrower based on three main factors:

  • Age of homeowner(s)
  • Value of home
  • Current interest rates

The loan is repaid when homeowner permanently moves out, and repayment never exceeds value of home. The amount that is repaid is principal, accrued interest and service fees.


Reverse Mortgage Commonly Asked Questions

How does a reverse mortgage differ from a regular mortgage?
With a regular mortgage you pay the loan back with monthly payments. With a reverse mortgage the loan is paid back when you move out of the house. This normally will happen at the time of sale or transfer of title to another family member, so you will not make any monthly payments.

What are some uses for funds obtained with a reverse mortgage?

  • Hospital or health care costs
  • Repay existing mortgages
  • Reduce burden on children
  • Home repair or improvement
  • Pay property taxes
  • Daily expenses
  • Traveling
  • Gifts


Can I lose my home as a result of a reverse mortgage?
No, unless you do not pay your property taxes or maintain your homeowner's insurance policy, just like a regular mortgage.

I have a mortgage on my home; can I still get a reverse mortgage?
Yes, but all liens against the home need to be paid off with the proceeds of the reverse mortgage.

What happens to the equity that I have in my home when I sell my home?
The equity will be yours, or in the case of your death the equity will be realized when the home is sold and goes to your heirs according to your will or your estate.

How do I receive the money?
You can take it in a lump sum, monthly payments, or any combination of the two.

Are there any misconceptions about Reverse Mortgages?
Yes! Some examples include:

  • “The lender takes the house.”
    • False. The homeowner retains ownership. The Reverse Mortgage is a loan.
  • “I can be thrown out of my home.”
    • False. As long as property taxes and insurance are current, the borrower can stay in the home until they permanently move out.
  • “I can owe more than my home is worth.”
    • False. The homeowner can never owe more than the value of the home.
  • “My children will be against it.”
    •  History shows that children are in favor of Reverse Mortgages.