FAQ’s

1) Does my home qualify?

Property which qualifies include single family house, two-four unit properties, housed which are built after June 1976, townhouses and condominiums. Co-ops are not eligible.

2) Are there any special requirements to get a reverse mortgage?

The requirements are as follow: You must be the owner of the house, you should be at least 62 years old and have ample equity of the house. You have no special medical requirements. The lender will carryout a financial analysis of borrower of reverse mortgage to make sure that she/she is able to fulfill all the financial obligations which are mandatory. The obligation includes insurance and property taxes as well. Lender will also examine your income sources which includes, IRA, pension, 401k plans and social security along with the personal credit history. Lender will analyze the amount of money left after the one is spent on necessary expenses. If the lender thinks that you might not be able to pay all the financial requirements he/she can refuse the reverse mortgage loan to you.

3) What if I have an existing mortgage?

Even you own some money to the existing mortgage, you can still apply and qualify for a new reverse mortgage. The first condition for that is you must be able to all your existing mortgages. You can use the cash receive by the reverse mortgage to pay the existing mortgages. You can also use your save money, or you can get assistance from other family friend to pay existing loans.

For example, you are liable to pay $100,000 on existing mortgage. Based on your home value, age and other related factors, you are eligible for reverse mortgage with an amount of $125000, which means you can pay your existing mortgage and also you can spend $25000 in any way you want.

4) Will I lose my government assistance if I get a reverse mortgage?

In case you receive government assistance, it is important for you to communicate the government agencies or your advisors to find out the possible effects of the reverse mortgage on the following benefits.
Reverse mortgage can effects the Supplemental Security income and Medicaid benefits but it should not have any effect over the Medicare benefits or Social Security. If all the amount of reverse mortgage is taken upfront and deposited in the bank in the same time, this action might make you ineligible for the Supplemental Security income and Medicaid benefits. If that is not spent reverse mortgage amount in the same month in which it is deposited, it can exceed your SSI or Medicaid benefit limit which is around $2000 for singles and $3000 for couples. There is a huge risk that you might get not eligible flag for these programs. For safety, it is advised to contact your SSI administrator or financial advisor to make sure your eligibility is not in jeopardy.

5) What are My Payment Plan Options?

You can either opt to receive the lump sum money at once from a reverse mortgage or a fixed monthly payment as long as you live that house, as line of credit or you can use the combination of both as well.

6) How can I use the proceeds from a reverse mortgage?

The amount received in reuslt of reverse mortgage can be used for anything you want. You can either use it along with retirement income for daily expenses, to renew your house (installing new ramps, hall etc.). You can also use as your health care, to pay the existing mortgages, or to cover property tax or to prevent foreclosure.

7) How does the interest work on a reverse mortgage?

In reverse mortgage, the interest is only applied over the amount you receive. In reverse mortgage, both fixed and variable interest rate are available. This interest rate is tied to some index e.g. the London Interbank Offered Rate (LIBOR), or 1-Yr. Treasury Bill. Along with this, additional one to three percent margin is added to the rate you will be charged with. Interest is not paid form the loan amount you get but from the compounds until the loan repayments occur.

8) What is the loan closing date?

For reverse mortgage, the closing date is defined as the day when the borrower sign the on the reverse mortgage. On Block 1 on Page 1 of the Form HUD-1 Settlement Statement, this date must be identified and appear on which you receive th loan closing.

9) I elected to receive monthly payments, when will those monthly payments commence?

On the first business day of the month you will receive your first monthly payment. For example, if you opted to close the loan in the End of May and it is funded in the month of July, it means your first payment will be released on the first working day of July. If your loan closed and funded in June, then your payment will be delivered in the first working day of June.

10) Do I have to pay my property taxes?

Yes and it is one of your financial responsibility to ensure all taxes are paid in time. If you fail to do so, this will be termed as default as per your loan agreement and it will affect your reverse mortgage as well.

11) What is a maturity event?

Maturity event is any event which result in causing your reverse mortgage to call off. Once the loan has reached the maturity event, you will receive no additional funds these events includes:

All house owner have deceased.
The property has been sold to third party.
The property is no longer the primary residence of the borrower for any other reason except death.
The property is not well maintained by the borrower due to any mental or physical illness.
The borrower fails to fulfill the financial obligation such as paying insurance and taxes and there is no possible way to handle the situation.
The borrower is unable to repair the damaged property.

12) Can I pay off my reverse mortgage before a maturity event is reached?

Yes, in any given time you can return full reverse mortgage on the decided terms.

13) How long will my estate have to pay off the reverse mortgage once it has been called due and payable?

You have to pay all the amount of reverse mortgage fill once when it is due and payable. You should work closely along with your advisor to ensure that the loan of reverse mortgage is paid in time. If you are unable to arrange to pay for the reverse mortgage with your loan servicer, the lender can foreclosure between thirty days to six months after you loan is called payable and due. If you are working properly in order to pay your reverse mortgage in timely manner, it may stop the danger of foreclosure for some time. It is not normal to wait for foreclosure for more than one year after the maturity event has occurred. We will recommend you to work hard and closely work the lender once the reverse mortgage loan is payable and has been called due.

Important Information:

Federal Government is not “approved” or “endorsed” Reverse Mortgage. The Federal Housing Administration (FHA) provides certain benefits to both the borrowers and the lenders involved in the reverse mortgage. The FHA is not responsible to originate the reverse mortgage loans. The borrower is liable to pay the reverse mortgage unless and until the property is not transferred or sold so it is the responsibility of the person to pay all taxes, insurance and maintenance of the house, failing to perform any financial obligation will result in reverse mortgage loan call due immediately. Reverse mortgage is not a piece of cake. It totally depends on your financial situations and needs. We strongly suggest you to consult a financial advisor before taking the mortgage. You can also consult your counselor, kids, family members and other trusted people before taking this decision. For the record, this website is neither from FHA nor from HUD and it is not approved by any government agency or HUD.

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