Common Questions
Getting a reverse mortgage is an important decision that requires research and discussion with your family and financial adviser. Below is a list of questions and answers to start you off - but please feel free to contact our Reverse Mortgage Specialists for further information to help guide your decision-making.
- What is a Reverse Mortgage?
- How Do I Qualify For A Reverse Mortgage?
- What Can I Do With the Money?
- How Much Money Can I Receive?
- How Do I Receive the Money?
- How is Interest Charged on a Reverse Mortgage?
- What Costs are Involved with a Reverse Mortgage?
- When Does the Reverse Mortgage Need to be Repaid?
- Do I Still Own My Home?
- What is a Counseling Certificate?
- Why Should I Choose Mortgage Expo as my Reverse Mortgage Lender?
- What Documents do I Need to Complete a Reverse Mortgage?
What is a Reverse Mortgage?
A reverse mortgage is a special type of loan, which enables you to tap into the equity in your home and receive cash, a tax-free monthly check* and/or a line of credit. There are no income or credit qualifications and there are no monthly mortgage payments required. The loan is not repaid until you permanently leave your home.
How Do I Qualify For A Reverse Mortgage?
A reverse mortgage is easy to obtain, provided that:
- You are at least 62 years of age or older
- Your home is or will be occupied as your primary residence
- You have substantial equity in your home (proceeds of the reverse mortgage can be used to pay off existing liens or mortgages)
What Can I Do With the Money?
You can use the funds you receive from your reverse mortgage in any way you choose:
- Supplement your income
- Make home improvements
- Purchase a new home
- Pay off a current mortgage
- Finance medical expenses
- Pay off debt
- Buy a new car
- Travel
- College tuition or gifts to family
How Much Money Can I Receive?
The amount of money you can receive from a reverse mortgage is determined by your home's value, the age of the homeowner(s) and the current interest rate. A representative from Mortgage Expo will assist you in evaluating your options and can help you calculate the maximum amount of money that will be available based on your individual circumstance.
How Do I Receive the Money?
With a reverse mortgage, you have five disbursement options to choose from:
- Tenure option: Receive equal monthly checks for as long as you occupy your home as your principal residence
- Line of Credit: Draw cash from your reverse mortgage whenever and in whatever amount you choose, up to the available credit limit. Interest is only charged on the funds drawn from the line of credit
- Lump Sum Cash Advance: You can receive all of your loan proceeds in a lump sum upon the closing of your reverse mortgage
- Modified Tenure: Set aside a portion of the loan proceeds as a line of credit, in addition to receiving monthly checks
- Term: Receive equal monthly checks for a fixed period of time that you select (for example, five or ten years)
You can change the manner in which you receive your funds as frequently as you wish for a very small fee.
How is Interest Charged on a Reverse Mortgage?
The interest on a reverse mortgage can be a fixed interest rate or an adjustable rate, which is tied to readily available market indexes. The initial rate is determined at loan closing. Interest charges do not affect the amount of your monthly checks, and you are only charged interest on your loan balance.
What Costs are Involved with a Reverse Mortgage?
As with a regular mortgage loan, there are closing costs involved with a reverse mortgage. These fees can be financed into the loan, and typically include the cost of the appraisal, title insurance, loan origination, escrow and recording fees. A Mortgage representative will be happy to provide you with a closing cost worksheet of the costs involved.
When Does the Reverse Mortgage Need to be Repaid?
The reverse mortgage becomes due and payable when the borrower permanently leaves the home - whether he or she moves, sells the home, or passes away. Reverse mortgages are typically repaid from the proceeds of the sale of the home, with any remaining equity staying with the homeowner or his or her heirs. If a spouse passes away, the surviving spouse continues to receive the full benefits of the reverse mortgage, with no repayment until he or she decides to permanently leave the home.
Do I Still Own My Home?
Absolutely. You retain full ownership of your home when you obtain a reverse mortgage. As with any mortgage, the lender has a lien against your property. No monthly mortgage payments are required, and as a result the loan balance increases during the term of the loan. When the loan is repaid, the borrower or his or her heirs pay off the loan balance, which consists of the financed closing costs, the cash advanced from the reverse mortgage and the interest that has accrued. The remaining equity stays with the homeowner or his or her heirs.
What is a Counseling Certificate?
Before applying for a reverse mortgage you are required to meet with an independent reverse mortgage counselor. This free counseling session will help you determine whether a reverse mortgage is right for you. The counseling session can be done either in person or on the telephone, and family or trusted friends are encouraged to participate. At the end of the meeting you will receive a Certificate of Borrower Counseling. Please call 1-877-599-2006 for a list of qualified counselors in your area.
What are some of the benefits?
- The title of the property always remains in the homeowner's name, never changing ownership
- The funds from a Reverse Mortgage may be used in any manner the senior wishes with no restrictions
- Income received from a Reverse Mortgage are tax-free, doesn't affect Social Security, Medicare or Medicaid benefits
- There are no monthly payments on any of the used money
- No out of pocket costs to do a Reverse Mortgage
- All Reverse Mortgage fees and interest are deferred until both seniors move out permanently, sell the home or pass away.
- Now the government will allow seniors to purchase a new home using the new Reverse Mortgage Purchase program
- The amount is based on a HUD formula that factors the age of the youngest borrower, interest rate and appraised value
- To find out how much money you can receive, please visit our Reverse Mortgage Calculator
- Cash lump sum all at once. The funds may be used in any manner you wish, with no restrictions
- Monthly installments that would be paid to you for the rest of your life
- Line of credit that allows you to access cash when you need it. The unused portion of money will grow at market rate compounded monthly
- Combination of the above
- All options are tax-free
- A Senior Reverse Mortgage is only due when both homeowners pass away, sell the home or choose to vacate the property
- The Reverse Mortgage must be repaid from the sale of the home or through other resources
- The estate or heirs can keep the property once the Reverse Mortgage is paid. If the home is sold the remaining equity goes to the estate or heirs
- Reverse mortgages are considered a non-recourse loan. The homeowner never guarantees all money owed will be paid back. If more is owed on the home than what it can be sold, the government is responsible
Why Should I Choose Mortgage Expo as my Reverse Mortgage Lender?
Our company's commitment to customer service and affordable housing solutions has earned us national recognition as a top lender in the Reverse Mortgage industry.
Please email us at info@mortgageexpo.com or call 1-877-599-2006 (toll free), and one of our representatives will be happy to discuss the program with you in greater detail.
No obligation