Reverse Mortgage Frequently Asked Questions
Q: "I was told I no longer own my home if I do a reverse mortgage. Is that true?"
Not true. The homeowner keeps title to the home in their name. As with any loan, forward or reverse, you must meet and abide by all the requirements of the loan terms, or the lender can foreclose on your home. With a reverse mortgage, you must continue to pay your property taxes and home owners insurance on time. You must also keep your home in good repair.
Q: "Am I required to make a payment on my reverse mortgage?"
No, you are not required to make a payment. However, if you choose to make a payment, the lender will gladly accept it from you.
Q: What does Loan Maturity mean?"
Loan Maturity means the end of the life of your loan. If there is a balance on your mortgage, it is due immediately.
Q: "Will there be a balance on my Reverse Mortgage if I die or move out?"
More than likely. We can help you determine this.
Q: "How will my heirs pay the balance if it is due immediately?
Your heirs are allowed 12 months to arrange loan payoff with the lender. Please communicate with the lender your intentions.
Q: "Can I refinance to a Reverse Mortgage and payoff my current loan?
Yes. Generally if you owe less than 50% of the value of your home this can be accomplished.
Q: "Do I have to claim the money I take from the Reverse Mortgage as income on my tax return?
No. The money you take from the Reverse Mortgage is Tax FREE!
Q: Will the money I take from the Reverse Mortgage cause my Social Security income to be taxed?
No. It may allow you to defer your Social Security Benefits so you can claim more in your later years.
Q: "When I die, can my kids live in the home and use the Reverse Mortgage?"
No.
Q: "Are my heirs required to sell the home when I die?
No. If they do not want the hassle of selling the home, they will communicate to the lender that they do not want the home. The lender then takes on the responsibility. It is called Deed in lieu.
Q: "What is a Deed in Lieu"
It is a transaction where the homeowner voluntarily transfers title of the home to the lender in exchange for the release of any further mortgage obligation.
Q: "If my heirs sell the home for $300,000 and the balance owed on the reverse mortgage is $200,000, who keeps the difference?
Your heirs.
Q: "Can my heirs buy the house from the bank?"
Yes. They can purchase the home from the bank at 95% of the current value.
Q: "What if the balance of the Reverse Mortgage is more than what the home is worth?
The lender forgives or washes their hands on any amount over the appraised value.
Q: "Can I put my home in a Trust?"
Yes.
Q: "Can I pull cash out of my home with a Reverse Mortgage?"
Yes.
Q: "How much cash can I get?"
It depends. You will qualify for a certain loan amount based on the age of the youngest borrower. We then subtract any existing mortgage liens on your property from the amount you qualify for. The remaining balance is cash you can access.
Q: "What is the maximum loan I can get?"
Every clients maximum loan amount will be different. Please call us and we can help determine the amount.
Q: "What if I have bad credit, do I still qualify?"
Each borrowers credit situation is different. We do a credit check on every borrower that applies for a Reverse Mortgage. All credit is subject to an underwriting decision.
Q: "Do I have to be a certain age to be eligible for a Reverse Mortgage?"
Yes, in Utah the minimum age is 62 years old.
Q: "I am 62, but my spouse is not. Are we still eligible for the Reverse Mortgage?"
Yes. Your spouse would be considered a non-borrowing spouse. He/She would not be on title, but could still live in the home after you die.
Q: " I was told I could use the Reverse Mortgage like a home equity line of credit?"
There are two types of Reverse Mortgage loans. A Fixed Rate and a Line of Credit. So, yes
you can use it like a Home Equity Line of Credit if you choose that type of loan. 90% of
of our clients choose the Line of Credit Option.
Q: "Is there a benefit to choosing the Line of Credit Option over the Fixed Option?"
Yes. The line of credit amount grows annually based on the unused portion of funds, regardless of the equity position. This means, every year you could have more available money from the Reverse Mortgage.