1. Can I qualify for a Reverse Mortgage?
Reverse Mortgages must all meet the guidelines established by HUD's Federal Housing Administration (FHA.) The FHA requires that the borrower is a homeowner, 62 years of age or older; live in the home and have sufficient equity in the home based on your age and the value of your home. To protect your interests and make sure that a reverse mortgage is right for you, you must receive consumer information from HUD-approved counseling sources prior to obtaining the reverse mortgage.
2. Is there a restriction based on the type of home I own?
The only restriction is that your home must be a single family, or 2-4 family owner occupied dwelling. Townhouses, condominiums, detached homes, and some manufactured homes are eligible. Condominiums must be FHA-approved.
3. What's the difference between a reverse mortgage and a bank home equity loan?
With a traditional second mortgage loan, or a home equity line of credit, the bank considers your income and amount of debt because you are required to make monthly mortgage payments back to the bank. The reverse mortgage is different in that you receive payments from the bank, and there are no income or debt restrictions to obtaining a reverse mortgage. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home. You are still required to pay your real estate taxes and your homeowners insurance just like a conventional loan.
4. Do I still own my home or does the bank own it?
YOU still own your home. You are not signing over your ownership rights to the property, you are merely taking a loan against the equity in the home that will be repaid when you sell your home are no longer use it as your primary residence.
5. Can the lender take my home away from me if I outlive the term of the loan?
No! The lender cannot take your home away. You do not need to repay the loan as long as you or one of the titled borrowers continues to live in the house and keeps the real estate taxes and homeowners insurance current. You can never owe more than your home's value on a reverse mortgage.
6. Will I still have an estate that I can leave to my heirs?
Yes, when you sell your home or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs, not the bank.
7. How much money can I get with a reverse mortgage?
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home. See AARP’s reverse mortgage calculator to determine how much you could borrow: AARP Reverse Mortgage Calculator
8. How do I receive my money?
There are 5 ways you can elect to receive your money:
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Tenure - equal monthly disbursements to you as long as at least one borrower lives and continues to occupy the property as a principal residence.
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Term - equal monthly disbursements to you for a fixed period of months.
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Line of Credit - unscheduled distributions or in installments. Can be taken at any time or amount that the borrower chooses until the line of credit is exhausted.
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Modified Tenure - combination of line of credit with monthly disbursements to you for as long as the one of the borrowers continues to occupy the home as a primary residence.
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Modified Term - combination of a line of credit with monthly disbursements to you for a fixed period of months of your choosing.
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