With a Reverse Mortgage, you do not have to make any monthly mortgage payments (homeowners must keep property taxes, insurance and HOA dues paid current and must maintain the home as their primary residence). Your credit score is also not the main determining factor for approval. Even if you have been turned down for a regular mortgage you still may qualify for a Reverse Mortgage.

A Reverse Mortgage is one of the safest loans you may possibly have. 95% of all Reverse Mortgages fall into the category of HECM’s (Home Equity Conversion Mortgage) which are insured by FHA and regulated by HUD through the US Government (Reverse Mortgage Authority is not acting on behalf of or at the direction of the federal government.) HUD has certain guidelines and protections that regulate the fees, expenses and interest rate you can be charged. You also must attend a counseling session by an approved HUD counselor to give you independent information. Other types of Reverse Mortgages also have similar protections built in.

Not necessarily. The majority of closing costs and fees can be financed into the reverse mortgage loan. In comparison to selling your home and moving, a reverse mortgage loan may provide a more cost efficient option by allowing the homeowner to access a portion of their home equity.

There are no monthly mortgage payments because any existing mortgage is paid off at closing using the proceeds from the reverse mortgage loan.

Entitlement programs like Social Security and Medicare typically are not affected. However, need-based programs like Medicaid can be affected. You should consult your financial advisor and appropriate government agencies for any effect on taxes or government benefits.

A home equity loan and a reverse mortgage loan both use the home’s equity as collateral. Any homeowner can apply for a home equity loan. A homeowner must be at least 55 years old to apply for a reverse mortgage loan. A home equity loan typically must be repaid over 5 or 10 years. A reverse mortgage loan is generally not repaid until the homeowner passes away or permanently moves out of the home for 12 consecutive months. Reverse mortgage loan interest rates are comparable to home equity loan rates. Although reverse mortgage closing costs are generally higher than a home equity loan, typically the closing costs can be financed as part of the reverse mortgage loan.

If the children or heirs want to keep the house once you no longer occupy it they can pay off the Reverse Mortgage through any means available to them, or purchase the home. This is a non-recourse loan so you and your heirs never owe more than the house is worth. They can also sell the house to repay it and keep any remaining equity. We suggest that Reverse Mortgage applicants have a will in place to direct their heirs on what to do with the home.

With a Reverse Mortgage, not only do you not have to make any monthly mortgage payments (homeowners must keep property taxes, insurance and HOA dues paid current and must maintain the home as their primary residence), you also do not have to worry about credit or income qualifications. Even if you are behind on your mortgage or headed into bankruptcy or foreclosure*, you may still be able to obtain a Reverse Mortgage. *Must meet guideline requirements.

It is important that you contact the servicer of the loan to notify them that the borrower(s) have passed away. The servicer’s contact information can be found on the monthly statement. Let the servicer know the situation and they will guide you on the next steps and what you (the heirs) will need to do next.

The estate does inherit the home, but there will be a lien on the title. If your heirs wish to retain the property, then the full amount of the loan must be paid regardless of property value. The amount due at loan maturity is the principal borrowed plus any accrued interest and mortgage insurance premium.

For example, if someone with a $250,000 home passes away and leaves a reverse mortgage loan balance of $80,000, then the estate would sell the home for $250,000, repay $80,000 to the bank, and keep the $170,000 difference.

As a non-recourse loan, lenders can only look to the value of the home for repayment; no other assets may be attached if the loan balance grows beyond the mortgaged home value. You or your heirs will not be required to pay more than the value of your home at the time the loan is repaid; even if your loan balance exceeds the value of your home provided you or your heirs decide to sell the home.

Loan proceeds are not considered income and are not taxable; however you must continue to pay property taxes. Consult your financial advisor and appropriate government agencies for any effect on taxes or government benefits.