QUESTIONS AND ANSWERS

FAQS/QUESTIONS AND ANSWERS

Q: What is a Reverse Mortgage?

A: A Reverse Mortgage is a mortgage on your home set up to pay you money. Specifically, it is a lien against the property that must be repaid when the borrower permanently leaves the property. It does not require any payments from you as long as you live in your home. You will never owe more than your home is worth. Payments to you from certain Reverse Mortgages are guaranteed by HUD/FHA government agencies.


Q: How do I qualify?

A: To qualify, you and any co-borrower must be at least 62 years-of-age and own a home. This home must be your primary residence. There are no income requirements and no credit requirements to satisfy.

Q: How much money can I qualify for?

A: How much money you can receive is based upon several factors: The age and number of borrowers, the value of the house, current interest rates, the maximum loan amount and the program you select.

Q: How is the money paid to me?

A: There are several options available for receiving money, also referred to as your "equity":

Lump sum payment

Monthly payments for as long as you live in your home

Monthly payments for a fixed number of years

A line of credit you can draw upon as you needed

A tenured (lifetime) payment option- where your loan value will continue to grow! Or a combination of these options that best meets your needs.


Q: When will my reverse mortgage become due and payable?

A: Your reverse mortgage must be repaid when you either sell your home or permanently leave the residence. In the event of death, your heirs will have the choice of keeping the house and repaying the loan with liquid assets or a conventional mortgage, or selling the house and using the proceeds to repay the loan.

Q: What happens if I choose the lifetime payments and they exceed the value of my home?

A: If this happens, FHA will pay the loan difference to the lender at time of payoff. None of your other assets can be used to pay your Reverse Mortgage.

Q: What if I use all of the available proceeds?

A: This could happen if you choose a term payment, line of credit or lump sum payment. If you choose the tenured (lifetime payment) payment, you will be paid until you leave the home. However, no matter which plan you choose and no matter if or when you receive all loan proceeds, you can still stay in your home and hold title without any repayment, as long as the house remains your primary residence.

Q: What fees are involved with a Reverse Mortgage?

A: Besides interest, a Reverse Mortgage typically involves five types of fees:

An Appraisal
An origination fee
Third party closing costs
Initial and annual mortgage insurance premiums
A monthly servicing fee
Costs are financed through your new loan; there is no cash out-of-pocket..

Q: What types of reverse mortgage programs are available?

A: There are several reverse mortgage programs available, including the FHA-Insured "Home Equity Conversion Mortgage (HECM)", the Fannie Mae "Home Keeper", and Financial Freedom's "Cash Account." Consult your Reverse Mortgage specialist to see which program best suits your needs.

Q: How will this affect my taxes, Social Security and Medical benefits?

A: Payments received from a reverse mortgage are considered to be a loan, not income. The payments made to you are not subject to income tax and do not affect social Security benefits and do not affect Medicare benefits. Borrowers receiving Medicaid or Supplementary Social Security Disability Insurance (SSI) may or may not be affected if the funds from the reverse mortgage are spent in the month they are received, depending on your other asset types.

*Consult your own tax advisor for further details specific to your situation.

Q: How are required repairs determined?

A: Repairs may be required as a result of the property appraisal and/or termite inspection report. Your loan officer will inform you of required repairs prior to closing. Whenever possible, minor repairs should be completed prior to closing. In some cases larger repairs can be completed from a repair escrow account ("set-aside") from loan funds after closing. Only a contractor licensed in the state in which the repairs are needed should perform any required repairs.

For more information call: Gloria de Gaston Boone,
Reverse Mortgage Specialist at
703 244-8151 24/7