- What is a reverse
- A reverse mortgage is a home loan that allows
you to draw some of the equity in your home in the form of cash that you can use any way you see fit.
- Why are reverse mortgages so
- Reverse mortgages are no more expensive than
any other FHA loan. Because the loans are regulated and insured by the Federal Housing Administration they are required to have mortgage insurance. Mortgage insurance requires an initial
payment at closing which is sometimes confused with a lender imposed fee.
- Why are there no payments on a reverse
- There are no payments because the interest
that is due every month is simply added to the loan and is part of the balance that is eventually paid back.
- When I sign a reverse mortgage does the bank
take ownership of my home?
- No. The bank does not take ownership of
your home. Please remember that, as the owner of the home, it is your responsibility to keep current on the property taxes, homeowners insurance and to maintain the condition of the
- What happens to my home when I pass?
Does the bank or the government take it then?
- Neither the bank nor the government takes you
home when you pass. The house belongs to you and you decide who gets it in your will.
- When is the loan paid
- The loan is paid back when the last borrower
leaves the home for good. This can occur when they pass away but it can also occur if they sell the home while they are still alive.
- How is the loan repaid?
- Usually, the loan is repaid from the equity in
the home when it is sold.
- What if there is not enough equity to pay off
the loan? Do my kids get stuck with the debt?
- No, they don't. All reverse mortgage
loans are insured by the Federal Housing Administration.
- Neither you, nor your heirs, can ever owe more
that the house is worth.
- What if one of my kids want to keep this house
after I pass?
- If one of your heirs wishes to keep the home
they need only pay off the balance due on your reverse mortgage.
- They can do this with their own funds, by
taking out a new loan on the property or a combination of the two.
- Will I get stuck paying income taxes on the
money I take out?
- No. There is no income tax due on money
you take from a reverse mortgage.
- Will I lose my Social Security or Medicare
benefits if I take a reverse mortgage?
- Not at all. Social Security and Medicare
benefits are not affected by a reverse mortgage.