Reverse Mortgage FAQ's
What is a reverse mortgage?
  • A reverse mortgage is a safe and easy way for seniors to turn their home’s equity into an additional source of income to meet any financial need.
  • It is a loan that is available to senior homeowners who are at least 62 years of age.
  • Unlike traditional home equity loans, this product does not require repayment of any kind until the home is sold, or the borrower permanently leaves their primary residence.
How do you qualify for a reverse mortgage?
  • Borrowers need to be at least 62 years of age,
  • Own their home, and live in their primary residence.
  • There are no income or credit qualifications.
How are the proceeds paid?
  • Lump Sum.
  • Monthly (Tenure) Payments - for Life of Loan.
  • Term Payments – for specific period of time
  • Line of Credit – with growth
  • Modified Tenure – Combination of Monthly Payment and Line of Credit
Are there any limitations on the proceeds?
No. Reverse mortgage borrowers may use the proceeds for whatever they wish:
  • Pay off debt, including mortgage and credit cards.
  • Make needed home repairs.
  • Pay for home health care.
  • Make additional retirement investments
  • Purchase Long Term Health Insurance
  • Help grandchild with college expenses
  • Travel
Why consider a Reverse Mortgage?
  • No repayment until home is sold or borrower permanently moves.
  • Unlocks the equity built into home.
  • No income or credit qualifications.
  • Proceeds received as tax-free income.
  • Interest is paid at time loan is repaid – not during loan.
  • FHA Insured or Fannie Mae Guaranteed.
  • Flexible payment options.
  • Growth on credit line option.
  • No debt passes to heirs.
What factors determine the amount received?
How much a borrower acquires from the reverse mortgage depends upon:
  • Age
  • Current interest rates.
  • The home value.
Exactly how “safe” is a reverse mortgage?

Reverse mortgages are a very safe income option for senior homeowners.
  • Borrower(s) name remains on title.
  • Debt owed on loan does not pass to heirs.
  • Borrower will never owe more than the loan balance or value of property whichever is less.
  • Strictly regulated by government agencies.
  • Closely monitored by industry associations like AARP and NRMLA (National Reverse Mortgage Lenders Association).
Common Misconceptions

There are several misperceptions surrounding the reverse mortgage program.
  • “The lender can take my home!” Nothing is further from the truth. You and only you will have title to the home.
  • “The money I will receive is subject to Federal Income Taxes!”
    Not True! The proceeds from a Reverse Mortgage are considered freed up equity and are not subject to taxes.
  • “I will only be able to use the funds to pay off a loan!”
    You can use the proceeds from a Reverse Mortgage for whatever you wish. After paying off any debt on the house you can buy a car, take a vacation, complete needed repairs to your home or however you wish to use the money.
  • “I will not be able to leave anything to my children!”
    The equity in your property is yours and only yours. You can leave it to your heirs as you wish.
What are the borrower responsibilities?
  • Attend a free, but required counseling session.
  • Maintain property.
  • Continue to pay taxes and insurance on property.
Eligible property types
  • Single Family Residence.
  • Planned Unit Development (PUD).
  • 1-4 unit Property, as long as borrower occupies 1 unit.
  • Condominiums.
Reverse Mortgage Summary
  • Age minimum 62.
  • No shared appreciation with lender.
  • No monthly payment required.
  • No principal repaid until client cannot permanently occupy property.
  • Client retains title to property.
  • When sold profit goes to client or estate, if loss no deficiency.
  • No restrictions on the use of the money.
  • Income, Employment, Assets and Credit stated but not used in underwriting.
  • Credit Report Required for information only.
  • Non-recourse loan – No additional debt left to heirs.
  • Available with “Life Estate”.
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