Do I HAVE to go through HUD Counseling?
Yes. And that’s a GOOD thing. We, and the government, want you to know exactly what to expect with a Reverse Mortgage. Counseling can be done in person or over the phone, and it only takes about 60 minutes.
Are there limits to how I use the proceeds?
No. Use the money for whatever you want: medical bills or other outstanding debt, long-term health care, travel, home improvements. The options are as limitless as your imagination.
What if I own a condo or mobile home?
Even if you don't have a “traditional” house, there are options if you own and live in a manufactured home built after June 15, 1976 or a condo.
Am I giving up my home to a bank?
The loan must be repaid when the last surviving borrower passes or no longer lives in the home. Because HECM (Home Equity Conversion Mortgage) Reverse Mortgages are federally insured loans, you and your heirs are not liable for any deficiency if, when the loan becomes due, the home sells for a fair market price that's less than the loan balance.
How does this affect the future sale of my home?
After the last surviving spouse dies, the heirs typically either pay off the loan and keep the home or sell the property and keep any profit that exists after the reverse mortgage is paid off.
How do I receive my proceeds?
You can get your money through a lump sum at closing, through a line of credit or through monthly payments to you. Aren't options great?
What Is Mortgage Insurance Premium?
This is a required part of your loan and it protects you so that you will not owe more money in the event sale of the property brings an amount insufficient to pay off the loan.
When do I have to pay back the loan?
The loan is usually paid back through sale of the home after the last surviving spouse passes away or moves out for one year or longer. You never have to make principal and interest payments while you live in the home - no matter how long you live.
Do I have to pay taxes on this money?
No! The money from the Reverse Mortgage is considered loan proceeds and therefore is not considered income, but you should consult with your tax advisor about your specific situation.
Do my spouse and I both have to be 62?
Not necessarily. But this may add some risk. So please be sure to inform your loan officer if your spouse is under 62.
What if I owe more than the home when I die?
The loan balance is due after the last surviving spouse passes, but because Reverse Mortgages are federally insured loans, it will not affect your heirs if the home fails to sell for enough to satisfy the loan.
Will this affect my Social Security or Medicare?
Reverse Mortgages typically don't impact these or pension benefits, but since programs vary from state to state, be sure to consult your trusted financial advisor.