Frequently Asked Questions (FAQ)

Q. How can I benefit from a reverse mortgage?

A. The most important benefit is that there are no monthly payments. Another attraction is that the funds you receive are tax-free. There is no affect to Social Security or Medicare benefits. Tax-free funds received from the reverse mortgage could actually help reduce your taxes. For example, if you are receiving income from retirement funds or other taxable investments, taxable income could be substituted with tax-free income. This would also allow your retirement funds to continue to grow.

Q. Who is eligible?

A. You have to be a homeowner, with or without a mortgage. In fact, many people get a reverse mortgage so they can pay off their traditional mortgage. The owners must be age 62 or older. If there is more than one person on the title, the youngest person has to be at least 62 years old. And the property has to be your primary residence. Unlike a traditional loan, there are no required credit, asset, or income qualifications.

Q. Does the bank own my house?

A. No, a reverse mortgage, just like any other mortgage, is a lien against your primary residence. Senior borrowers maintain full ownership, title, and control of their home. Repayment of the loan is deferred until seniors sell, transfer title, or no longer permanently reside in the home. Borrowers can pay down or pay off the mortgage at any time. They also have control over how they receive the tax-free money available from the loan. It can be received as a lump sum, as monthly income, as a line of credit to be drawn later, or any combination of these options.

Q. Could I owe more than my home's value?

A. No. The amount available to be borrowed is calculated based on the borrower’s age, the value of the home, and current interest rates. Once the equity is released and the loan is funded, the subsequent value of the home is inconsequential to the loan amount. For any reason should the loan balance exceed the home value, the senior is protected because the loan is non-recourse. This means that the senior or their heirs will never owe more than the value of the house at the time of repayment. The senior can remain indefinitely in the residence, and all other assets are safeguarded.

Q. How can I receive my money?

A. You can receive a lump sum, monthly income, a growing line of credit, or in any combination. You can change that combination whenever you like.

Q. Do I have to use the funds for a specific purpose?

A. There are no limitations on how you spend the funds received. It is your home converted into your money. The most common uses are to pay healthcare expenses, pay off existing loans, supplement income, and travel. Other uses may be purchasing long-term care insurance, setting up a college fund for grandchildren, establishing trust accounts, or purchasing a vacation home.