+ What is a reverse mortgage?
It is a home loan available to seniors over 62 years old, live in the house and who have equity in the home. The reverse mortgage uses the equity in the home to give the homeowner monthly payments (also it can be done in a lump sum) It is tax free and the borrower only needs to pay back the money when they move, die, or sell the house.
+ What are the differences between a reverse mortgage and a traditional mortgage?
There are several differences you need to know. First, there are no income requirements since the borrower doesn’t need to make any payments. The same thing happens with credit history: your credit history is of no concern.
Also, as you get payments, the equity in your home is reduced. On a traditional mortgage the equity in your home increases as you make your monthly payments. At no time you need to make any monthly payments for as long as you live in the house or sell it.
Finally, you can not be thrown out of your house for any reason. The only exception is that you have to pay real estate taxes like everybody else.
+ How much money can I get from reverse mortgage?
The amount you can qualify for depends on your age, the value of the home, the interest rate that you are charged and the limits set by the FHA for your area. In general, the older you are, the more valuable the house is and the lower interest rate you are charged, the more money you can get out of your reverse mortgage.
+ How can I use the proceeds from the reverse mortgage?
It depends on the type of reverse mortgage you get. If you get a single purpose reverse mortgage, you can only use the money for a specific purpose such as home improvements or property taxes.
If you choose a FHA insured reverse mortgage, you can use the money for whatever you see fit.
+ What are the basic requirements needed to qualify for a reverse mortgage?
You must be sixty-two years old or older. You also need to live in the house and take a reverse mortgage counseling session (If taking a FHA reverse mortgage.) You also need to have a large portion of the value of the home in equity. Single family residences, FHA condominiums, one to four units apartments and mobile homes are types of properties accepted.
+ What are the consequences on the home ownership?
You maintain ownership of your house during the whole time. Therefore, you are still obligated to pay maintenance costs, insurance and real estate taxes.
+ Do reverse mortgages change my Social Security and Medicare benefits?
The funds received from a reverse mortgage are tax-free. However, you still need to maintain your liquid assets below the maximum allowable to get the maximum benefits from Social Security and Medicare. You should consult your accountant or the reverse mortgage counselor you are entitled to find out more about your unique situation.