**You are required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan. This will take about an hour and can be done in person or by phone. This service is free to the homeowner.
You can contact the Housing Counseling Clearinghouse on 1-800-569-4287 to obtain the name and telephone number of a HUD-approved counseling agency or click on the link below.
HUD Approved Housing Counseling Agencies
What is a Reverse Mortgage?
A Reverse Mortgage is a federal loan program, guaranteed and insured by the U.S. Department of Housing and Urban Development (HUD), that allows senior 62 years and older to convert part of their home’s equity into cash to be used however they wish. No credit, no income, and no payments are required as long as the borrower lives in the home.
How much could I qualify for?
At 62 years of age, the borrower qualifies for approximately 50% of the value of his / her home up to the FHA maximum amount, which varies from county to county. The older the borrower, the more he / she may qualify to receive.
How can I be sure a Reverse Mortgage is right for me?
HUD counseling is provided at no charge and is required prior to making an application for a Reverse Mortgage loan.
Can a Reverse Mortgage be taken out if there is already another mortgage on the home?
Yes, but the Reverse Mortgage must first pay off the existing mortgage. The remaining portion of the loan can be used at the borrower’s discretion. The borrower doesn’t have to own the home free-and-clear, but must qualify for enough to pay off existing liens.
Does the lender own the house?
No. A Reverse Mortgage is merely a loan against the property. The title remains in the homeowner’s name until the home is sold or the borrower leaves the property. The lender is only repaid the loan balance or the home value, whichever is less.
What if I owe more than my home is worth?
All Reverse Mortgages are “non-recourse” loans, which mean that the borrower can never owe more than the value of the home regardless of the loan balance. This ensures that the borrower’s heirs will not inherit this debt.
How much will my monthly payments be?
ZERO! The borrower does not make monthly payments with a Reverse Mortgage and cannot lose the home.
If there are no payments, what are my responsibilities as a borrower?
The borrower is required to pay property taxes, keep current property insurance, maintain the home, and notify the lender if the borrower plans to be away from the property for an extended period of time.
Can I sell whenever I want?
YES!
Can I sell my home to my children and still live in it with a Reverse Mortgage?
No. All persons named on the deed must be 62 years or older.
When does the loan become due and payable?
The loan is due when the borrower sells the property, permanently leave the home, or pass away. If the borrower is married, repayment is required when the borrower’s spouse leaves the property provided the spouse is named on the loan. (Tim, did I capture the concept correctly?)
What are the upfront costs associated with a Reverse Mortgage?
The borrower will pay an origination fee and the actual closing costs, including all charges assessed by the title or escrow companies. These costs can be financed as part of the initial loan advance with no cash or out-of-pocket expense to the borrower.
How is the money paid to me?
The money can be paid as a lump sum, a line of credit, monthly income or a combination of all three.
Are there any restrictions on how I use the money?
NONE!
Will this affect my SSI, Medicare, Medicaid, or Pension benefits?
A Reverse Mortgage will not affect these or most other benefits as long as any monthly cash advances are fully spent every month and not accumulated. Please call for more detail. Programs vary from state to state and it is advisable to check with Citywide Mortgage for more information. We also recommend that you consult with your financial advisor.
Will I have any tax liability for the Reverse Mortgage payments?
Currently the IRS treats monies received from a Reverse Mortgage to be a loan advance, not taxable income. For specific situations, we always suggest consulting with a tax advisor.
What is due when the loan is paid?
The cash advanced plus any accumulated interest.
Is the interest rate fixed?
It can be. Citywide Mortgage offers both fixed and variable rate loans.
Can the interest on my loan principal be deducted for tax purposes?
Accrued interest is deductible only when the loan balance and interest are paid.
Living Trust
Homeowners can usually receive a Reverse Mortgage subject to review of the trust documents.
|
|
