Frequently Asked Questions
Here is a list of frequently asked questions so you can start the reverse mortgage process with all the information you need.
If you have additional questions, don’t hesitate to get in touch with us — someone from our professional team will happily assist you!
When I get a reverse mortgage, do I sign my home over to the bank?
What happens to the equity in my home when I take out a reverse mortgage?
A reverse mortgage doesn’t affect home equity any differently than any other type of negatively amortized mortgage.
Since you aren’t making payments, the loan balance will grow through negative amortization; this amount is calculated for you based on your loan amount so that you can understand what each month or year does to your equity.
Additionally, a reverse mortgage will not affect the future equity building in your home over time.
Will my children have to repay the loan?
Reverse mortgages are non-recourse loans.
If the property is sold to pay off the loan when the homeowner passes away or decides to leave the home for any reason, the balance due (up to the sales price of the home) will need to be paid. In the unlikely event that the loan balance is higher than the market value of the home, then any overage due is forgiven and the homeowner and or heirs are not responsible for the overage due.
The maximum loan payoff is the current market value of the property. If the heirs want to keep the home, they must pay the balance, up to the fair market value, in full to the reverse mortgage lender.
Can I get a reverse mortgage if I still have an existing mortgage?
What if I live longer than expected, can the lender evict me?
No, there is no time frame with a reverse mortgage. You can stay in your home without making payments for the rest of your life.
Do I need good credit?
Reverse mortgage lenders look at your credit, however, they take a “common sense” approach to determining eligibility
Aren’t reverse mortgages expensive?
Additionally, if you sell your home and there is equity left after paying it, you can keep it. However, if you owe more than the home is worth, you are not responsible.
The equity in your home can become an income source that will make your life much more comfortable!
What happens if the owner becomes ill and needs to be moved to a senior care facility?
Reverse mortgages are not due and payable until the last surviving borrower dies, sells the home, or does not live there for 12 consecutive months. Just remember that the taxes and insurance always have to be paid, and the property needs to be well maintained.
As long as the owner lives in the home, the loan won’t be affected, and remains in full force and effect.
What demographic of seniors are most likely to get a reverse mortgage?
- Immediate needs, such as paying off their existing mortgage or other debts.
- Home improvements.
- Medical expenses.
- As part of a retirement plan.
- To help with long-term care.
- To buy or downsize to a new home without a mortgage payment (called a HECM for purchase).
Wouldn’t I be better off selling my home?
Are all reverse mortgages the same?
A good lender will present the facts and let you decide without added pressure.