What if I live in Florida for half the year?
That’s fine, you just need to live in your primary residence for six months and a day.
Will your children receive more or less after you pass away, than they would without the reverse mortgage?
It depends on what you do with your overall finances. Some heirs may well receive more by the borrower being more efficient with the use of their entire portfolio of assets.
Note: This is not financial advice. Please consult your financial advisor for your specific situation.
What if I go into a nursing home?
As long as you are simply rehabilitating and getting better, your home and reverse mortgage are still yours until two doctors agree it is impossible for you to ever return to your home.
When does the reverse mortgage have to be paid back?
Your reverse mortgage will become due when one of these things happen:
- You sell your home.
- You permanently move out of your home.
- The last person on the title passes away. Your heirs will have two options. They can choose to sell the property, pay off the reverse mortgage balance and keep any remaining equity, or they can choose to keep the property by refinancing the balance of your reverse mortgage with a new mortgage in their name. Remember if the loan balance ever exceeds the home value, it does NOT trigger an early payoff or cause you to have to move out of your home.
If you took all of the money from the reverse mortgage in a lump sum and spent every bit of it, would you be able to go on living in your home?
Yes, your reverse mortgage will not become due until you pass away, sell your home, or are no longer living in the home. If you use all of the available proceeds, you would not have any more money available and interest would accrue until one of the three events referenced above occurred.
What happens if at any time the amount you owe under a reverse mortgage is greater than what your home is worth?
Nothing as long as you still live in your home and pay taxes, homeowners insurance, and maintenance.
If you get a reverse mortgage, how does that change the amount of money that you will leave to your children (or other heirs)?
Most likely, it will decrease the amount of money the heirs will receive from the value of the home. However, your overall net worth will likely get better, because you will not be spending as much from your other accounts.
When you have a reverse mortgage, who owns your house (whose name is on the title/deed)?
You remain the owner of your property. There is no change to the deed or title of your home when completing a reverse mortgage.
There are several “payment options” or ways to get money from a reverse mortgage. Which payment option do you think will best meet your needs?
It depends on your situation. Our trained loan officers have helped hundreds of seniors pick the best option for their personal situation. You can do a lump sum payment, ongoing monthly payment, or you may also choose a line of credit allowing you to access your money as you need it. Your line of credit will be guaranteed to grow every year that you don’t use it.
What happens if you change your mind later and want to change your payment plan?
As long as you still have money available to borrow from your reverse mortgage, you can change your disbursement option for a small, one-time fee. Remember when the value of the loan is higher than the home value it does not trigger an early payoff or due date.
When you have a reverse mortgage, do you have to make a monthly mortgage payment to the bank?
No, but for tax or cash flow purposes including Medicaid planning you may wish to do so. What basic responsibilities will you continue to have after you get a reverse mortgage? The homeowner remains responsible for the payment of annual property taxes and homeowner’s insurance as well as basic upkeep of the property.
What may happen if you do not keep up these responsibilities as a borrower?
If you do not continue to do these three basic things, the lender is required by HUD to foreclose.
When you purchase a home with a HECM, will the HECM be held on your existing home or your newly purchased home?
The HECM will be held on the newly purchased home as your primary residence. The down payment you will need to bring to closing is usually between 30-70%.
How will the lender determine how much money you will need at closing?
The down payment you will need to bring to closing will be determined based on your age, interest rates at the time and the sales price (or appraised value, whichever is less) of the home you are buying.
What sources of funds (money) are allowed when you purchase a home with a HECM?
The money must come from your own liquid assets (bank accounts, CD’s, retirement accounts, etc.) or from the documented sale of other assets you may have (your present home for example).
Why is my down payment higher with a reverse mortgage?
Your down payment is higher initially because you will never be required to make a monthly payment (except for taxes, insurance, and maintenance). With a traditional mortgage you will lose much more in cash flow over the years because of the consistent required payments. Remember the HECM for Purchase also can allow you to purchase a more expensive home than what you would otherwise be willing to commit to in payments for the next 20-30 years.
Reverse Mortgage Benefits
Take advantage of some of these reverse mortgage benefits that increase your purchasing power and flexibility.
- No monthly mortgage payments*
- Tax free cash from loan proceeds**
- Increased discretionary cash flow
- Can sell YOUR home at any time
- Keep The Title To Your Home***
- Basic Credit & Income Qualifications
- Loan Proceeds from Equity 30-74% are Usually Tax Free**
- No credit score requirements, but some income and credit qualification for property taxes is required
- Does NOT Require Repayment Until****
- The Last Living Borrower Permanently Leaves The Home
- Borrower Chooses To Sell The Property
- Never Owe More Than Home Value – With FHA-Insured Reverse Mortgages
- Able To Purchase A Home For 30-70% Down Of New Residence Sale Price*****
*There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes, insurance and maintenance. Credit is subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change. **This advertisement is not tax advice. Please consult a tax advisor for your specific situation. ***You must continue to pay taxes, insurance and maintenance. ****Heirs will have 6 months with two 90-day optional extensions to either refinance the home if they want to purchase it at 95% of the appraised value; keep any net proceeds; or walk away if property is upside down. *****Percentage of down payment required is determined by borrower’s age, interest rates, and the lesser of the home’s appraised value or purchase price.
Eligibility Requirements to Purchase
One borrower must be 62 years or older
- Purchased home is required to be your primary residence
- New property must be: single-family home, 2-4 unit dwelling or FHA approved condo
- Must receive reverse mortgage counseling from a HUD approved counseling agency
- You must have an adequate down payment for your new home or a gift from a family member
- Age 62 Or Older
- FHA-Qualified Home
- Must Live In Home More Than 6 Months A Year
- Generally Won’t Affect Social Security and Medicare Benefits*
*This advertisement is not tax or financial planning advice. You should consult a tax and/or financial expert for your specific situation.
Why work with Fairway Reverse Mortgage Planners?
Since opening our doors in 1996, we have not only been dedicated to providing unparalleled customer service, but also to growing continuously. Fairway now employs more than 7,000 team members including over 3,000 producers and over 500 branches nationwide. Over the years, our team has helped thousands of Americans achieve their dream of homeownership. With a strong focus on purchase business, we continue to grow each year, funding more than $21 billion in 2017.
Reverse Mortgage Basics
Receive Tax Free Money from Your Home Equity:
A reverse mortgage is a loan that converts equity in your home into cash that can be used for many different purposes that will enhance and extend your retirement plan. If you currently have a mortgage, a reverse mortgage could eliminate your current monthly mortgage payment and also allow you to access any additional equity (over and above your mortgage balance) to create accessible cash which is not readily available while in the form of equity in your home. You must still pay property taxes, homeowners insurance, and maintenance.
You have spent many years putting your money into a special account called “home equity” and now with a reverse mortgage, you can convert that equity in to cash – tax-free!* Most reverse mortgages are insured by the Federal Housing Administration (FHA) and are called Home Equity Conversion Mortgages (HECM).
Eliminate your Monthly Mortgage Payment:
A HECM is the only mortgage that never requires a payment until you pass away or move out of your home. You are required to always pay taxes, insurance, and maintenance on your home, but whether you take a line of credit, monthly checks, or a lump sum, you will never be required to make a mortgage payment during your lifetime as long as you live in your home. However, should you choose a line of credit, you have the option of paying down the line should you wish to have less cash and increase your equity.
Never Owe More Than What the Home is Worth**:
When you permanently move out of your home, whether you sell it or pass away, neither your estate or your heirs are responsible to pay the deficit if the balance owed on your reverse mortgage exceeds the home value. However, should your heirs want to keep your home, they may purchase it for 95% of the current appraised value.
**There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.