Reverse Mortgage Information – Frequently Asked Questions

No, the lending bank does not take control of your home’s title. You do not relinquish ownership of your home by using a reverse mortgage loan. Instead, you are borrowing against the value of your home’s equity. Just like with any other mortgage loan, as long as you maintain your home, pay property taxes and insurance and otherwise abide by the terms of the loan, you continue to own your property.

As with any other major financial decision, be sure the lender you work with is reputable and trustworthy. Lincoln Chris, your Reverse Mortgage Specialist and advisor, can help you decide if a reverse mortgage loan is a good option for your situation.

I’ve heard that a reverse mortgage loan is a scam.

Just like most financial products, a reverse mortgage loan is highly regulated by the Federal Government. A Home Equity Conversion Mortgage (HECM) type reverse mortgage is even insured by the Federal Housing Administration (FHA). A reverse mortgage is a great way, as you enter your golden years, to make use of the equity you have in your home to:

• Pay off your current mortgage, so that you no longer need to make house payments
• Downsize to and purchase a smaller home
• Pay unexpected healthcare costs, make home improvements, afford a significant purchase, or have a rainy day fund
• Create a monthly paycheck (for the lifetime of the borrower, or for a specific amount of time)

However you decide to use the money from your reverse mortgage, the funds are tax-free. You will never need to make monthly payments on your home again (as long as you live in it and continue to pay property-related taxes, insurance and upkeep.)

As with any home loan, there are fees associated with a reverse mortgage loan. Most of the fees can be financed with your loan, so there are no immediate out-of-pocket costs. These costs can be added to the loan amount and paid, along with the accrued interest, when the loan becomes due. Reverse mortgage fees may include: a loan origination fee, closing costs,and mortgage insurance premium.

Lincoln Chris, your Reverse Mortgage Specialist and advisor,can determine what the exact interest rates and associated fees will be, before your loan is finalized.

When you (and your spouse) die, your reverse mortgage loan, including fees and accrued interest, will need to be paid. Your heirs may decide to sell the property and use the proceeds to repay the loan and split the remainder of the proceeds. Or, they may decide to refinance the property with a conventional loan, so that your home stays in the family.

Whatever your heirs decide, if the sale of the home does not cover the entire loan balance, the FHA pays the difference, not your family members. In the meantime, you have enjoyed the benefit of the extra money and peace of mind that a reverse mortgage provides.