Federally Insured Reverse Mortgage
- Live at Home
- No Affect on Social Security Benefits & Not Taxable
- Make No Payments As Long As You Live In Your Home
- No Income, No Credit & No Health Requirements
- Federally Insured Government Program
Q. Can I qualify for a HUD reverse mortgage?
To be eligible for a HUD reverse mortgage, The Federal Housing Administration (FHA) requires that
the borrower is a homeowner, 62 years of age or older; own your home outright, or have a low
mortgage balance that can be paid off with proceeds from the reverse mortgage; and you must live
in the home. You are further required to receive consumer information from HUD-approved
counseling sources prior to obtaining the loan. We can assist you in obtain the name and telephone
number of a HUD-approved reverse mortgage counseling agency.
There are NO credit, NO income and NO health requirements for a reverse mortgage.
Q. Do I have to pay income tax on the proceeds?
No. Proceeds from a reverse mortgage are not taxable income. For your specific situation, we
recommend that you consult your personal tax advisor.
Q. Will this income affect my Social Security or Medicare benefits?
NO. Money from a reverse mortgage is not considered income, nor does it affect Social Security or
Q. How much money can I get from my home?
The amount you can borrow depends on your age, the current interest rate, other loan fees, and the
current appraised value of your home or FHA's mortgage limits for your area, whichever is less.
Generally, the more valuable your home is, the older you are, the lower the interest, the more you can
Q. How will I receive my money?
You'll have four options:
you live in your home)
- Lump Sum
- Monthly Payments (your choice of loan advances for a specific period, or for as long as
borrower's choosing until the line of credit is exhausted)
- Line of Credit (unscheduled payments or in installments, at times and in amounts of
- Any combination you would like of the above three choices
Q. What's the difference between a reverse mortgage and a traditional home equity loan? With a traditional mortgage,
or a home equity line of credit, you must have sufficient income versus the amount of debt you have to qualify for the loan. Plus,
you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you and is available
regardless of what your current income is. The amount you can borrow depends on your age, the current interest rate, other loan
fees, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more
valuable your home is, the older you are, the lower the interest, the more you can receive. You don't make payments, because
the loan is not due as long as the house is your principal residence. Like all homeowners, you are still required to pay your real
estate taxes and other conventional payments like insurance & utilities, but with an FHA-insured HUD Reverse Mortgage, you
will never lose your home for not making a payment because no payments are due".
Q. Can the lender take my home away if I outlive the loan?
No! Nor is the loan due. You do not need to repay the loan as long as you or one of the borrower's (example - your spouse)
continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home's value.
Q. Will I still have an estate that I can leave to my heirs?
When you sell your home or no longer use it for your primary residence, you or your estate will repay the money, interest and
other fees you received from the reverse mortgage, to the lender. The remaining equity in your home, if any, belongs to you or
to your heirs. None of your other assets will be affected by HUD's reverse mortgage loan.
Q. What are the "Out of Pocket Costs"?
Typically there is only one, an application fee that includes the cost of an appraisal.
(Other loan costs may be included in your Reverse Mortgage).
Q. Can I apply if I didn't buy my present house with FHA mortgage insurance?
Yes. While your property must meet HUD minimum property standards, it doesn't matter if you didn't buy it with an FHA-insured
mortgage. Your new HUD reverse mortgage will be a new FHA-insured mortgage loan.
|Brian R. Barnes
nmls # 238617
a.k.a 'The Loan Professor'
Reverse Mortgage FAQ
Q. What is a Reverse Mortgage
Many retiree's are finding their retirement or social security income is not entirely
adequate. A reverse mortgage is a government insured home loan that allows only
seniors 62 & older to convert a portion of the equity in their home into cash. The equity
you've built up over the years can be paid directly to you. But unlike a traditional home
equity loan or second mortgage, this program is Federally insured & no repayment is
required until you no longer use the home as your principal residence.
Q. What types of homes are eligible?
Your home must be a single family dwelling or a two-to-four unit
property that you own and occupy. Townhouses, detached
homes, condominiums and some manufactured homes are
eligible. Condos must be FHA-approved. Condominiums may
qualify under the Spot Loan program. The home must be in
reasonable condition and must meet HUD minimum property
standards. In some cases, home repairs can be made with the
proceeds of the reverse mortgage.
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