How does a Reverse Mortgage work?
A Reverse Mortgage is a financial tool which allows seniors to convert the equity in their homes into cash in their hands. Depending on age, and equity specifics, a reverse mortgage works based on the concept of relinquishing one’s equity to the bank in return for eliminating mortgage payments, and even receiving significant cash payments.
How long does it take for a Reverse Mortgage to close?
On average, a Reverse Mortgage will take 20-30 days to close.
Do I have to pay off my reverse mortgage?
No. A Reverse Mortgage is a non-recourse loan, or a loan which requires no repayment. This is why it is referred to as a Reverse Mortgage. Instead of making payments in an effort to repay a loan like most conventional loans, the Reverse Mortgage pays you, and the loan is due only after death of the last surviving spouse.
Can I choose to continue making payments even after my reverse mortgage?
Yes. Many conservative clients choose to continue to make their mortgage payments even though they are not required. You may make all, half, or even a fraction of your payments in an effort to keep the loan balance from increasing.
Do I still own my home after a reverse mortgage?
Yes. A Reverse Mortgage has no effect on the ownership of your home. After a Reverse Mortgage you will maintain title to your home.
Can the bank take my home?
No! This is one of the biggest myths of the Reverse Mortgage product. Even if you live to 125 years of age, the bank can never take the home from you. As long as property taxes, insurance and necessary maintenance repairs are made, the loan will only come due after death of the last surviving spouse.
How much money can I receive from a reverse mortgage?
Cash received from a reverse mortgage varies greatly. Some clients qualify simply for the elimination of their mortgage payments, while others receive over $400,000. The average client receives close to $130,000, plus the life-long benefit of no mortgage payments.
Does a reverse mortgage really eliminate your mortgage payments?
Yes. Cash received from a Reverse Mortgage is simply “icing on the cake.” The main motivation for many qualified seniors is for the guaranteed elimination of their mortgage payments for the rest of their life.
Does All California handle Reverse Mortgages too?
What determines how much money you receive from a reverse mortgage?
The main factors in cash received are your age, and equity. As a general rule, as both age and equity increase so does the amount of cash received.
What payment plan options are there?
There are many different payment plans for receiving your cash proceeds from a reverse mortgage. The most popular delivery option is the lump sum option where the entire sum of money is given at the time of closing. Other options include a line of credit, fixed monthly payments, or a combination of these.
How much does a Reverse Mortgage cost?
An average Reverse Mortgage costs close to $13,000, and is paid from the proceeds of the loan. That being said, closing costs can be configured, with some reverse mortgages costing closer to $2,500.
Are there limits as to what you can do with the money from a reverse mortgage?
No. The money you receive from a Reverse Mortgage is yours, and can be used for whatever you like. Many seniors invest the money, use it for a dream vacation, apply it to home renovations, and set it aside for long term in-home health care, while others sleep with it safely under their mattress.
How old do I have to be for a reverse mortgage?
Both you and your spouse have to be 62 years of age or older.
What is equity?
Equity is quite simply the difference between the appraised value of your home, and the loan amount owed on the property. For example, a $250,000 home with a loan amount of $150,000 has $100,000 of equity.
Can I get a Reverse Mortgage if I own a condominium?
Yes. Approved condominium complexes qualify for reverse mortgages as do single family homes, townhouses, 2-4 unit properties, and manufactured homes built after June 15, 1976 with permanent foundations, and HUD seals affixed.
Are my children able to inherit my home even after a reverse mortgage?
Yes. The Reverse Mortgage comes due at the time of the passing of the last surviving spouse. The surviving family can choose to pay off the reverse mortgage, which will never be a higher amount than the value of the house, and gain possession of the house. If the house sells for more than the loan amount of the reverse mortgage, the profit goes to the family or into the estate. If the family does not wish to take ownership of the home, the Reverse Mortgage need not be paid off.
Can I refinance an existing reverse mortgage?
Yes. Many seniors find it beneficial to refinance their current Reverse Mortgage to a lower interest rate.
Do I have to pay taxes on cash received from my reverse mortgage?
No. The equity in your home is already owned by you, and therefore the proceeds from a reverse mortgage are tax-free funds.
Is Reverse Mortgage counseling required?
Yes. In order to be ensured that our clients are knowledgeable with the Reverse Mortgage, they are required by the government to take part in a third-party counseling service. This brief counseling can be done over the phone or face-to-face, but must be completed before any final documents are signed.
Does a reverse mortgage affect my government assistance?
A Reverse Mortgage has no effect on normal Social Security or Medicare benefits. Those on Medcaid though must use the Reverse Mortgage funds immediately, in order to avoid an impact on Medicaid eligibility. To be safe, you should contact the local AAA (Area Agency on Aging), or a Medicaid expert.