Below are general questions and answers. Guidelines are always changing and therefore this information could also change. Ask your loan officer if changes to guidelines will effect your situation. The FHA makes the rules on reverse mortgages and their website can be viewed here.
Q. Can I lose my home if I get a reverse mortgage?
A. The only requirement of a reverse mortgage is that you pay your taxes and insurance and keep the home in good repair. If you have other fees like homeowners association or condo fees, naturally they are still due and in force. Therefore if you abide by the guidelines, the answer would be no.
Q. Can my taxes, insurance and other monthly home costs be paid automatically.
A. Some loan services may provide this option. Ask your loan servicer.
Q. Are there any out of pocket costs to me in this process?
A. Generally, the answer is very little. Some HUD counselors do ask for payment before the loan process starts, this is usually less than $200. An appraisal is required and that is usually around $450-$575 depending on the home. Like all costs, this will be disclosed upfront.
Q. Can I out live my reverse mortgage ?
A. No. There is a small insurance policy on your loan balance which ensures you, nor your heirs will ever have to pay anything towards the mortgage.
Q. Will my heirs ever have to pay anything towards this mortgage?
A. No. The only requirement of a reverse mortgage is that you pay your taxes and insurance and keep the home in good repair. Once the house is sold the remaining equity (if any) is distributed via the normal legal channels in place. Any shortages at the time of sale is generally covered by the FHA mortgage insurance on the loan. This is the primary reason the insurance is part of the process and exists on all FHA reverse mortgage loans.
Q. What is the catch on reverse mortgages?
A. There is NO catch. Like all products there are closing costs which will be clearly and accurately disclosed to you. Once you understand the costs, you will be coached by a unbiased third party who will explain the pros and cons to you. This person has NO interest in the transaction and is there to ensure this product is right for you. They work for HUD (Housing and Urban Development) and are NOT associated with us or the lender. They are YOUR advocate.
Q. How much money will I get?
A. The answer for that differs for each person. I would be happy to run a no obligation quote over the phone for you.
Q. How do I get my money out of my home?
A. There are several options to get money from your home. Each program offers different options. Below is a list of all the options but keep in mind, they vary by program. Ask your loan officer which applies to you.
1) Monthly payments to you.
2) A lump sum.
3) A credit line.
4) A combination of these options. You get to choose what is best for you.
Q. What is the total cost of a reverse mortgage?
A. It will depend on the product you choose as well as other factors. It is different for everyone. Your costs will be clearly outlined BEFORE you make any decisions to move forward. Your HUD counselor will also be sure you understand these. NOTHING is hidden ! Reverse mortgages are highly regulated to protect senior citizens. This, is a GOOD thing.
Q. What can I do with the proceeds of my reverse mortgage?
A. It is your money, you can do anything you wish.
Q. Are the proceeds taxable?
A. Generally, no. However, you should always consult a tax professional before making financial decisions.
Q: Does my home qualify?
A: Eligible property types include single-family homes, 2-4 unit properties, manufactured homes (built after June 1976), FHA approved condominiums, and townhouses.
Disclosure information: C2 Financial Corporation, NMLS 135622. Fla license # MLD #1136. Loan approval is not guaranteed and is subject to lender review of information. C2 is an equal opportunity mortgage broker/lender. C2 Financial Corporation is approved to originate VA and FHA loans,and has the ability to broker such loans to VA/FHA approved lenders.C2 Financial Corporation is not acting on behalf or at the direction of HUD/FHA or the VA. Reverse Mortgage Specific Disclosure: The loan is repaid when the last borrower leaves the home or refinances the home or passes away. When the home is sold or refinanced the proceeds pay back the loan, accrued interest and mortgage insurance All of the remaining equity goes to the borrower or their heirs. As with any home-secured debt, the homeowner remains responsible for property taxes, homeowners insurance, HOA dues and property maintenance. An under-age spouse is not a borrower and is not on title. Their right to remain in the property for life is dependent on meeting all conditions of the HECM program including continued payment of property taxes and homeowners insurance and maintenance of the property. Available tenure payments or lines of credit extended to the borrower will cease upon their demise and will not be available to the non-borrowing spouse. For the National Mortgage Licensing Consumer access click here.