FREQUENTLY ASKED QUESTIONS
Here are answers to some commonly asked questions. If you have questions that aren't listed, contact us at 727-828-6061. You can email us at or .
• At least one borrower must be 62 or older (Some products allow for as young as 60)
• Own your home or have significant equity
• Home must be your primary residence
• Borrower must participate in a HUD approved reverse mortgage counseling session
• Home must be well-maintained, and all property taxes and insurance must be paid
Title and liens are handled the same way a forward mortgage is, which is to say the lien and title are handled state specifically. Check to see if your state is a title theory or lien theory state for more guidance.
The immediate impact of a reverse mortgage on your home’s equity isn’t any different than a forward mortgage, except that over time, interest accrues on top of the initial principal and the balance increases steadily. Generally, appreciation and inflation help to grow future home equity and help hedge against the accruing balance. Your home is still your biggest asset in your retirement portfolio and more often than not continues to grow in value over time.
No, reverse mortgages are non-recourse loans, meaning only the collateral can be pursued to fulfill the debt. If heirs decide the property is to be sold to pay off the loan when the homeowner passes away or decides to leave the home for any reason there will be no mortgage debt for the homeowner, family or heirs to pay. The maximum loan payoff is the current market value of the home, and any positive equity after sale of said home would be passed on to heirs as well, despite the fact any negative equity would not fall onto the heirs. Generally, if the heirs choose to keep the home they would need to pay the balance in full or take out a new loan with in 6-12 months to satisfy the debt.
Heck yeah you can! Eliminating an existing mortgage payment is an extremely popular strategy for those seeking to soft-land into retirement. As long as you have enough equity, some of the proceeds from the reverse mortgage can be used to pay off an existing mortgage.
No, there is no time frame! You cannot be made to leave your home providing you follow the loan guidelines (paying property taxes, homeowner’s insurance, HOA fees, maintenance of the home, etc.) and live in the home as your primary residence.
Good credit is not a requirement for qualification for a reverse mortgage, although certain outstanding debts like tax liens and government debt may be taken into consideration. Guidelines may dictate a Life Expectancy Set Aside (LESA) is required if certain credit issues are present.
Fees and costs for a revere mortgage are generally very similar to a forward FHA mortgage, and while some of the fees can seem expensive (UFMIP, appraisal, title, etc.), they are a natural part of any mortgage process, whether reverse or forward.
A reverse mortgage is not due and payable until the last surviving borrower dies, sells the home, or does not live there for 12 consecutive months, providing the taxes and insurance are paid and the property is maintained. So as long as one owner lives in the home, the loan will not be affected and continue to provide cash flow. If there is only one borrower, and said borrower becomes ill and moves to a senior care facility to a nursing home or assisted living for more than 12 consecutive months, the reverse mortgage loan will need to be paid back, either in full or through sale of the home. Any equity remaining after a sale in such circumstances would remit back to the homeowner.
There is no one demographic. Seniors choose reverse mortgages for many reasons including immediate needs, such as paying off their existing mortgage or other debts. Others use the money for home improvements, medical expenses or to buy or downsize to a new home without a mortgage payment (called a HECM for Purchase) or as part of a retirement plan. A Reverse Mortgage can also help with long term care.
Not necessarily. If you sell your home, it may cost you up to 10% of your home's equity in sales costs alone. After selling, you may have to pay rent or have another monthly payment that eats away at your savings. Also, moving for many seniors is an overwhelming task. And lets face it, you wouldn’t be here reading this right now if you wanted to sell your home, after all, it’s one of the biggest retirement nest-eggs! You can benefit from accessing tax-free funds from your existing housing wealth without having to give up your largest appreciating asset.
No. While most reverse mortgages are similar in structure, the product field is growing larger with demand. Fixed rates, adjustable rates, government vs non-government, lines of credit…not all products, and not all lenders are the same. You want to work with a firm that thoroughly understand these types of loans and can go over every option available to you. A true professional will present the facts and let you make the decision, without added pressure.
No, your home doesn't have to be in perfect shape. If there are repairs required by the lender, they can be done after closing in many cases.
Yes. A Reverse Purchase Mortgage, or a “Home Equity Conversion Mortgage (HECM) for Purchase” is a loan that allows people 62 and older to purchase a new principal residence with HECM loan proceeds.
A Reverse Purchase Mortgage, or “HECM for Purchase” loan requires that you be 62 years of age or older and that the home you are purchasing be your primary residence. You will need to have cash available for the down payment. There will also be closing costs, which will be higher than those with other reverse mortgage loans, although some of these closing costs may be paid by the seller. For HECM for Purchase loans you’ll need cash to pay the difference between the HECM proceeds and the sales price plus any closing costs. Like all reverse mortgage loans, you will not have to make monthly payments on the HECM for Purchase loan. You will still need to fulfill the reverse mortgage requirements, such as living in the home as your principal residence, keeping the home in good condition, and paying your property taxes and homeowners/flood insurance premiums on time. Not all properties are eligible for the HECM for Purchase loan program. For example, cooperative units and some manufactured homes are ineligible for the HECM for Purchase loan program.
If you are currently paying a mortgage payment, and would like to not have to make that payment anymore, that’s what we mean. By taking out a Reverse Mortgage, your current mortgage is paid off, eliminating that payment. As a Reverse Mortgage doesn’t require a payment, you now have freed up real income, by way of eliminating the mortgage payment. While the monthly payment has gone away, the principal balance remains and grows over time, accruing interest; generally speaking, appreciation of the home's value continues as well. It is important to note: Taxes, Insurance and Maintenance are ALWAYS required. If income is an issue for these requirements, a LESA (Life Expectancy Set Aside) is always an option.