Frequently Asked Questions

These three qualifications come up whenever someone asks, “What is a reverse mortgage?” They are:

• The borrower must be 62 or older (while applicants must be 62 or older, as long as one spouse meets this qualification the other can be younger than 62 and still qualify).
• The borrower must own the home.
• The home is the primary residence.

This is definitely one of the most frequently asked questions when it comes to reverse mortgage loans. There are two key elements to this answer: (1) The lender cannot take the home as long as one of the borrowers continues to live there as their primary residence and keeps the taxes and insurance up to date. (2) You will not pay more than the value of the home. The lender has no power to force you from the home and cannot make you sell – unless there are specific terms in the loan agreement that you do not hold to.

When the home is no longer used as your residence, the amount of the HECM reverse mortgage loan must be repaid. However, you (or your heirs) are not forced to sell the home, and you (or your heirs) can use other funds to repay the loan if they are available. If you choose, the lender can take the title of the home as reverse mortgage repayment. The amount due cannot exceed the value of the home, and no other assets will be affected.

The answer to this question varies with each property, of course, but in most situations, there are just a few factors to determine the amount you can get from a reverse mortgage. The factors include:

• Borrowers age
• Appraised value of the home
• Current reverse mortgage interest rates

When it comes to actually getting the funds, there are several options.

• You can receive a partial or full lump sum
• You can get monthly payments for a set amount of time
• You can get a reverse mortgage line of credit
• Or you can choose a combination of the above

This another common myths about this type of loan. The benefits of a pension, Medicare, and Social Security will not be affected. In fact, a reverse mortgage loan may actually improve the financial picture, due to the extra money added to retirement income. Therefore, wise use of a reverse mortgage may even allow you to hold off on starting Social Security income.

The only benefits that may be affected with a reverse mortgage include income-based benefits such as Medicaid.