Some of the reverse mortgage frequently asked questions. There are many seniors in the United States asking themselves if a reverse mortgage is the right financial product for them. Here is a list of questions that come up frequently, from the basic to the more complex:What is a Reverse Mortgage?
Almost any senior the age of 62 and older can tap the equity in their home as a source of tax-free income. Essentially, a reverse mortgage is a home equity loan.
What does HECM stand for?
HECM stands for Home Equity Conversion Mortgage and is the phrase that has been made up by the U.S. Department of Housing and Urban Development (HUD). Reverse mortgage and HECM are interchangeable because they mean the same thing.
Are there restrictions on how I can use the money?
There are no restrictions to how you can use the money you receive from a reverse mortgage. Previous borrowers have used it for living expenses, vacations and medical bills. It is completely up to you on how the money gets spent because it is your money.
What if I have a mortgage on my home already?
You can still use a reverse mortgage to pay off the current mortgage on your home. In fact many seniors do this so they no longer have a monthly mortgage payment on their home.
Can I use a reverse mortgage on my investment property?
No, reverse mortgages can only be used on your primary residence only.
Is the money I receive from a reverse mortgage taxed?
Normally all money received from a reverse mortgage is not taxed because it is a loan on your home. In the eyes of the government, a reverse mortgage is a home equity loan.
Does a reverse mortgage affect my government benefits?
Yes and no. A reverse mortgage will not affect social security income, Medicare or pensions. But it could affect Medicaid and supplemental social security income.
What are the closing costs on a reverse mortgage?
Normal closing costs associated with a reverse mortgage are the upfront mortgage insurance fee, lender fee, title insurance, appraisal and counseling cost.
What is reverse mortgage counseling?
HUD requires that all potential reverse mortgage borrowers go through a counseling session from a HUD approved counselor. Typical cost for these sessions run from $90 – $125. The session typically last about an hour depending on how many questions you may have.
What if the loan balance grows bigger than the value of my home?
You will never owe more than the value of your home. For example, if you sell your home and the balance of your home loan is $250,000, but the home sells for $225,000, then the FHA will pay the remaining balance without any recourse to you or your heirs.
What are the homeowners responsibilities?
The borrower must still pay the property taxes, hazard insurance, any HOA fees and maintain the property to standard living conditions.
Whose name is on the title of the home?
The borrower(s) remain the only ones on the title of the home and the lender does not have any interest in owning the home.
Please fill out the contact form at the right or by clicking here and have a qualified representative contact you!
Reverse Mortgage Frequently Asked Questions
![Reverse Mortgage Frequently Asked Questions]()
Reviewed by Merlyn Rosell
Published :
Rating : 4.5
Published :
Rating : 4.5