Frequently Asked Reverse Mortgage Questions
Who are Reverse Mortgages designed for?
Can a Reverse Mortgage be taken out if there is already a mortgage on my home?
What type of homes won't qualify for a Reverse Mortgage?
Will I have any tax liability for the Reverse Mortgage proceeds?
What about a home in a "living trust"?
Does the money from a Reverse Mortgage affect Social Security, Medicare or pension benefits?
Can the interest charged on my loan principal be deducted for tax purposes?
Will a Reverse Mortgage affect my SSI or Medicaid?
What are the upfront costs associated with a Reverse Mortgage?
What is due when the loan is repaid?
Will I ever owe more than my home is worth?
Will the lender take my house?
If there are no payments, what are my responsibilities as a borrower with a Reverse Mortgage?
When does the loan become due and payable?
Do I or my heirs have to sell the property to repay the loan?
Who are Reverse Mortgages designed for?
They are designed for homeowners at least 62 years of age with moderate to significant equity in their homes.
Can a Reverse Mortgage be taken out if there is already a mortgage on my home?
Yes, but any existing mortgages must be paid off at closing. The proceeds from the Reverse Mortgage may be used for that purpose.
What type of homes won't qualify for a Reverse Mortgage?
Vacation homes or other secondary residences, mobile or manufactured homes not attached to a permanent foundation, rental properties of more than four units and homes on leased lands do not qualify.
Will I have any tax liability for the Reverse Mortgage proceeds?
Currently the IRS treats monies received from a Reverse Mortgage to be loan advances and not taxable income. For your specific situation, we recommend that you consult your tax advisor.
What about a home in a "living trust"?
A homeowner who has put the home in a living trust can usually take out a Reverse Mortgage, subject to review of the trust documents.
Does the money from a Reverse Mortgage affect Social Security, Medicare or pension benefits?
The proceeds from a Reverse Mortgage do not affect these benefits. We recommend that you consult your financial advisor.
Can the interest charged on my loan principal be deducted for tax purposes?
The interest accrues and is deductible when the loan balance and interest is repaid, when the borrower permanently leaves the property. We recommend that you consult a tax advisor.
Will a Reverse Mortgage affect my SSI or Medicaid?
No, A Reverse Mortgage will not affect these or most other means tested benefits as long as the monthly cash advances are fully spent every month and not accumulated. Programs do vary by state so it's advisable to check with the local area agency on aging.
What are the upfront costs associated with a Reverse Mortgage?
The borrower will pay an origination fee, and actual closing costs, including charges by the title and escrow companies. All of these costs can be financed as a part of the initial loan advance.
What is due when the loan is repaid?
The borrower will pay back the cash advances they have received plus accumulated interest and any upfront costs that were financed initially will also be added to the loan balance.
Will I ever owe more than my home is worth?
All Reverse Mortgages are "non-recourse" loans, which means that the borrower can never owe more than the value of the home regardless of loan balance.
Will the lender take my house?
No, this is a misconception; a Reverse Mortgage is a loan against the property. The title remains in the name of the borrower(s) and the lender is only repaid the loan balance or home value; whichever is less.
If there are no payments, what are my responsibilities as a borrower with a Reverse Mortgage?
You are required to pay your property taxes, keep current the property insurance in place, maintain the home and notify the lender if you will be away from the property for an extended period of time.
When does the loan become due and payable?
The loan is due an payable when the last remaining borrower sells the property, permanently leaves the home, or passes away. Until these events take place you live in the home and make no payments to the lender.
Do I or my heirs have to sell the property to repay the loan?
No, repayment can be accomplished by a refinancing of the existing Reverse Mortgage by a conventional mortgage loan.
Christopher Russow
One Reverse Mortgage | Director of Mortgage Banking | Direct: 858.652.5903 | Fax: 734.386.2678 | Email: crussow@onereverse.com
