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FREQUENTLY ASKED QUESTIONS  Q: How does a Reverse Mortgage work? A: Reverse Mortgage allows you to convert a portion of your home's equity into tax-free cash, without having to sell your home, give up title or take on a new monthly mortgage payments. No monthly payments or repayments are due as long as you continue to live in your property. Instead of making monthly payments to a lender, a lender makes payments in exchange of equity.
Q: How do I qualify for a Reverse Mortgage? A: You must be 62 years of age or older and own your property. There are no limits or specifications related to income or credit history.
Q: What type of homes are eligible? A: Single family homes or a two-to-four unit property that you own and occupy as a primary residence. Townhomes, detached homes, units in condominiums and homes in planned unit developments (PUDs) are included. Condominiums and PUDs may have additional requirements.
Q: How much can I borrow?
A: The amount you can obtain depends on your age (or age of youngest borrower in the case of couples), the current interest rate, and the value of your property. In general, the older you are, the lower the interest rate and larger amount you are eligible for.
Q: What are the ways to convert the equity of my home into cash?
A: You have three options: a lump sum paid to you at closing, as a line of credit or monthly payments.
Q: Are there any restrictions on how I can spend Reverse Mortgage funds? A: No.
Q: Does the property title remain in my name? A: Yes. However, a lien will be placed on your property as a security for the Reverse Mortgage, just like any other mortgage.
Q: Are there any fees involved in obtaining a Reverse Mortgage? A: Yes, but you are not required to pay them at closing. The lender will pay and add them to your balance. Typical fees include lender fees and closing costs. In addition, a mortgage insurance premium will be required.
Q: What is the cost for the Mortgage Insurance Premium (MIP)? A: The typical price for the Premium is 2% of your home's value paid at the time you open your account, plus a 0.5% anually on your current balance.
Q: What is the Mortgage Insurance Premium (MIP) used for? A: The MIP is assessed on all borrowers to provide loss protection for both borrowers and lenders. This kind of protection makes lenders more willing to offer Reverse Mortgages to you. Also, the insurer will pay you what you are owed, if your lender is unable to pay.
Q: What happens if I decide to sell my property or move? A: If you decide to sell your property or permanently move out, the outstanding balance including fees, interest and cash received will be due and payable.
Q: What happens if a joint borrower dies? A: The provisions of reverse mortgage remain in effect. The surviving borrower continues to benefit from the program they selected.
Q: Can I do a Reverse Mortgage if I am in the process or entering into Foreclosure? A: Yes. As long as you contact a Mortgage Broker with Reverse Mortgage experience immediately in order to start helping you get out of foreclosure. The earlier, the better.
Q: Will Reverse Mortgage payments affect my Social Security, Medicare, Supplemental Security or Medicaid benefits? A: No, Reverse Mortgage payments will not affect your Social Security or Medicare benefits because those benefits are not based on your income or assets. If you receive any public benefit such as Medicaid, where eligibility is determined by income or assets, contact the Social Security Administration, Area Agency on Aging or Legal Services for guidence on your situation.
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