If my home is in a trust, do I qualify for a reverse mortgage?

That depends on the language in the trust, the state you reside in, and whether the trust is revocable or irrevocable. If you submit a fully executed copy over to us, we can have it reviewed before you make application.

If I have a recent appraisal that was completed on my home, can I use it? What if my son is an appraiser?

No, we cannot use the old appraisal or take any appraiser referrals. We will have to order an FHA appraisal as part of the processing of your loan. The appraiser will be randomly assigned and we will not be allowed to have contact with this individual.

Can they kick me out of my home once I’ve spent all the money on my line of credit?

No, you cannot be kicked out of your home at any time due to your spending of the proceeds. You only have to meet the terms of the loan and you can live in your home for the rest of your life. The terms include keeping the home your primary residence, not being out of the home for twelve consecutive months, not letting the home fall into disrepair, paying your taxes and insurance, and not changing the title into someone else’s name.

I am 62 years old and my wife is 58. Can I take her off the title to our house and get a reverse mortgage?

Yes, but only with much consideration. You and your wife would need to understand the consequences of the decision. In this scenario when the sole homeowner on the loan passes away, the loan is called due and the younger spouse must pay it off. Should you have a life insurance policy or other contingency plan in place, the loan might make more sense. If you are hearing that wife can be added when she turns 62, that information is not correct and is highly unlikely. You would have to refinance years down the road and hope that the two of you would qualify for a larger enough loan to pay off the first one in full. Proceed with caution in this scenario and speak with us and a HUD approved counselor before applying.

My spouse recently passed away and was on the loan with me. Does that change anything?

No. The terms of the reverse mortgage state that as long as one customer meets the terms of the loan, it will continue as we have offered it.

What if I decide to move out for any reason, temporarily or permanently?

The terms of the reverse mortgage state that you must keep the home as your primary residence. You cannot be outside of the home for 12 months consecutively or the loan can be called due.

Are there any prepayment penalties if I decide to make payments, in part or in full?

No, there are no prepayment penalties on FHA reverse mortgages. You can pay the interest as you go along if you’d like to have the deduction on your tax return for that year. Keep in mind that your payments will be applied to closing costs, FHA insurance, or interest. Speak with your loan servicer for more information about what category your payment will be applied to.

What are the different options for taking the proceeds?

The proceeds can only be taken as a lump sum when opting for a fixed rate reverse mortgage. When choosing the adjustable rate programs, you can elect to receive a lump sum, line of credit, monthly payments or a combination of these options. It is not unusual, for example, to see an adjustable rate customer choose to receive $10,000 at closing, $20,000 on a line of credit, and $500 per month for X months.

Keep in mind that until the funds are received, the interest does not accrue. Electing to take an adjustable rate reverse mortgage with a line of credit or monthly payments can drastically decrease the amount of interest that will accrue over a long period of time.

I have a very valuable home. Are there any limitations to the value that you’ll consider?

The FHA lending limit used to be based on Metropolitan Statistical Area (MSA), but it is now a national lending limit. Email us to find out what the current national limit is, because it can change at any time by an act of Congress.

My home has some deferred maintenance. How will that affect my ability to get a reverse mortgage?

It depends on how severe the “maintenance” is. Cosmetic issues like carpet cleanliness, interior wall paint, stained drywall, damaged gutters, etc. are often ignored during the transaction. The appraiser, when valuing your home, will make note of any FHA repair issues. Those items will need to be fixed in one of two ways, before closing, or after closing where we hold back an escrow to cover the cost.

If the total cost of the repairs are greater than 15% of the appraised value or the issues affect the livability of the property (structure, heating / air, plumbing, etc), the requirement will be that they be fixed prior to closing. If the repairs are of a less urgent nature, a contractor’s estimate is required. The contractor is chosen by you and must be licensed in the area.

You are given 12 months after closing to make sure the contractor completes the work. Once the work is finished, the original appraiser will visit again to certify the completeness of the repairs. If the inspection is satisfactory, the contractor is paid in full and any additional funds in the escrow are paid to you.

Who pays my real estate taxes & homeowner’s insurance?

In very rare circumstances, we’ll escrow for taxes and insurance for an estimated amount of time. The vast majority of reverse mortgages don’t have escrow accounts, leaving the customer responsible for their own taxes and insurance.

I am the Power of Attorney (POA) for my father and would like to obtain a reverse mortgage on his behalf. Can I handle the entire process for him?

First, make sure you have a durable general power of attorney that gives you the ability to encumber the property in question. Second, make sure the document has been executed before you look to obtain a reverse mortgage for him. Third, we’ll need to know if your father is considered “of competent mind” or not by his physician.

If he is competent, HUD requires him to participate in the counseling (by an independent, HUD-approved agency) and application process. You will be given the authority to sign a majority of the application documents and all of the closing documents on his behalf. We are not aware of any exceptions to this rule.

If he is incompetent, HUD will allow you to handle the entire transaction on his behalf with two doctor’s notes. The first will need to say that he was of competent mind when he signed the POA document. The second note will need to say that he is no longer competent due to a specific reason.

If you have any questions about these requirements, please email us.

What states do you do business in?

We can accept applications in Arkansas, California, Colorado, Florida, Georgia, New Jersey, Virginia, & Washington.

How do I know how much my home is worth?

You can do some preliminary research before speaking with us about your situation. The most common places to look are your county’s tax assessment and Zillow, among other places. You can even speak to a real estate agent in your area that has access to MLS to see what your neighbors are selling for. Keep in mind, we will order an FHA appraisal as part of the process to determine the actual value. The appraisal will look for three comparable sales in the past 6 months to a year to compare your home to.

Okay, so the proceeds aren’t taxable, but can they have an effect on my government benefits?

Social security and Medicare benefits are not affected by a reverse mortgage. Qualification for Medicaid or supplemental social security, among other needs based benefits, could be jeopardized by a reverse mortgage. It depends on many factors, including how the proceeds are distributed. Should you have any questions about how your benefits would be affected, please contact an elder law attorney or your Area Agency on Aging.

Are the proceeds from the reverse mortgage considered taxable income?

No, reverse mortgage proceeds are not income, no matter how they are received. The funds are considered loan proceeds and are not taxable.

How long do my heirs have to sell the home?

The estate is given six months with up to two three-month extensions, allowing for a full year to sell the home. They must make an effort to sell the home to qualify for the extensions. A limited time period is given, so an unrealistic sales price isn’t set, allowing the heirs to live in the home indefinitely.

Will there be anything left for my heirs?

Upon your death, your estate will repay the loan balance with cash, proceeds from the sale of the property, or by refinancing the loan (usually with a conventional mortgage). If they decide to sell, the estate will retain any additional proceeds from the sale. If your estate decides to & qualifies for a refinance, they will retain the home and any additional equity.

What if, when the loan is due, I owe more than my home is worth?

Reverse mortgages are considered non-recourse loans meaning you cannot owe more than the value of your home. Your home serves as the only collateral for the transaction. Any losses at the time of repayment are covered by the FHA mortgage insurance fund.

How much is due when I repay the loan?

Any funds you’ve received plus accrued interest, mortgage insurance, and closing costs will be repaid once you sell or no longer occupy the residence. You will be able to keep up with your mortgage balance because post-closing you will receive a monthly statement.

What if the title of my house is still in the name of someone else, such as my father, mother, deceased spouse, or other relative?

As part of the reverse mortgage process, we can help point you in the right direction to get the title corrected prior to closing.

What is the difference between a reverse mortgage and a home equity line of credit (HELOC)?

A home equity line of credit will also release equity in your home in the form of cash to be spent as you like. The main difference is that a home equity line of credit will need to be repaid monthly as do all conventional mortgages. A reverse mortgage does not have to be repaid until you sell your home or no longer occupy the residence. You will also need to have sufficient income & credit scores to qualify for a HELOC.

How long does it take to close a reverse mortgage?

It really depends on whether you’ve been through the counseling session or not . If you’ve been counseled prior to applying with our company, we’ll be able to close within 3-4 weeks. If you apply for a reverse mortgage prior to being counseled, the process is more along the lines of 5-6 weeks.  Keep in mind the counseling is provided by an independent, HUD-approved agency and in some states is required before you apply.