Common Reverse Mortgage Questions
Information on reverse mortgages for seniors.A quick Reverse Mortgage Questions guide on how to access retirement funds without selling your home and
What is a Reverse Mortgage?
Define a Reverse Mortgage:
- It is a special type of loan that enables individuals 62 or older to convert some of their home’s equity into tax-free funds1
- Unlike traditional equity loans, you may receive payments instead of making themWho is eligible?Homeowner(s) who are at least 62 years of age and occupy the property as their principal residence
- Eligible properties include single- family homes, FHA approved condominiums, townhomes homes and 2 to 4 unit dwellings (borrower must occupy one unit as their primary residence)
- The home must be owned free and clear or have an existing balance that can be paid off with the Reverse Mortgage California proceeds
- Minimal income, employment or credit requirementsHow much can someone borrow?The amount that can be borrowed is based on a HUD formula that factors in the age of the youngest homeowner, the interest rate, the lesser of the appraised value or the FHA lending limit and the amount of any existing liens on the house.
More Questions about Reverse Mortgages
What are some of the benefits of a Reverse Mortgage?
• The reverse mortgage customer retains ownership and lives in their home as long as they wish, provided all program requirements are met
• Loan proceeds can be used for any purpose including eliminating an existing mortgage, meeting daily and monthly expenses, or covering health care expenses
• Reverse Mortgage proceeds are not considered income and will not affect Social Security or Medicare benefits2
What type of interest rate options are there?
• A combination of the above options is also available
What are the costs involved with a reverse mortgage?
- A deposit for the appraisal is an out-of-pocket expense
- Closing costs are financed into the loan. These include origination
- fee, title insurance, a mortgage insurance premium and attorney fees
- The homeowner must maintain the property and remain current on property taxes, homeowner’s insurance and HOA dues
- Use Our Free Reverse Mortgage Calculator on the right
What are tax-free distribution options for Reverse Mortgages?
- Lump sum advances make funds immediately available
- Tenure plans provide fixed, monthly advances
- Line of credit makes funds available upon request
How is a Reverse Mortgage repaid?
- A Reverse Mortgage does not need to be repaid as long as one borrower lives in the home as their primary residence, maintains the property to FHA standards and remains current on the property taxes, homeowner’s insurance and HOA dues
- The amount owed when the reverse mortgage is repaid equals cash advances, financed closing costs and accrued interest. Any remaining equity stays with you or your heirs
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