Reverse Mortgage Q & A – Get the facts
A Few Things You Should Know About Reverse Mortgages
More than 100,000 reverse mortgages were insured last year by the U.S. Department of Housing and Urban Development (HUD). These federally insured loans, also called Home Equity Conversion Mortgages (HECMs), have become more popular as older Americans are looking to tap the equity in their homes so they can age in place.
More than one million reverse mortgages were issued between 1990 and 2015.
Here are some frequently asked questions about these loans.
Q: What is a reverse mortgage?
A: A reverse mortgage is a special type of loan that allows you to borrow against the equity that you’ve built up in your home. You must be at least age 62 to qualify. You can put the money toward anything you like, from paying medical bills to making home improvements. Unlike a traditional home equity loan, a reverse mortgage doesn’t need to be paid back immediately, not as long as you live in your home. That means no monthly checks to write to your lender. The HECM reverse mortgage program is insured by the Federal Housing Administration (FHA).
Q: Can anyone apply for a reverse mortgage?
A: No, you have to be at least 62. You also have to own your home outright or be able to pay off your home with the proceeds from a reverse mortgage. You must live in your home and your home must meet certain criteria according to HUD. Most single-family homes qualify, as do some condominiums, manufactured homes and multiunit structures that meet FHA requirements.
Q: How do I apply for a reverse mortgage?
A: You can get a reverse mortgage through a licensed reverse mortgage lender. Before you get a reverse mortgage you must have a session with a reverse mortgage counselor, and sometimes there is a fee associated with that consultation. Usually, counseling cost (around $100) can be rolled into the loan. You can receive the reverse mortgage in a lump sum, a line of credit or monthly payments. Reverse Mortgages are available in adjustable and fixed interest rates.
Q: If I take out a reverse mortgage, does the bank own my home?
A: No, the title remains with the borrower. When your home is sold, you or your estate will need to repay the lender any cash you received from the reverse mortgage, plus interest and other fees. Any remaining equity in the home belongs to you or your heirs.
Q: Do I still need to pay my property taxes and home insurance with a reverse mortgage?
A: Yes. Reverse mortgages are not like regular mortgages in which insurance and taxes are paid out of an escrow account, so you would have to pay those expenses. If for some reason your homeowner’s insurance has lapsed, you will need to reinstate your policy. You also need to be current on any homeowner’s association fees and property taxes.
Q: When do I have to pay back a reverse mortgage?
A: When you die, sell your home or permanently relocate.
Q: Are reverse mortgages expensive?
A: There can be upfront fees (i.e., mortgage insurance premiums, loan origination fees and closing costs) with Reverse Mortgages but these fees are regulated by the Federal Government; and many times these fees can be rolled into the loan or completely eliminated in certain situations.
Q: What’s the best age to take out a reverse mortgage?
A: Each person is unique in their needs and desires and as such, each individual or each family should review their circumstances with a qualified professional to determine at which age they can more fully take advantage of the Reverse Mortgage.
Sun American Mortgage Company
REVERSE MORTGAGE EXPERTS FOR 25 YEARS!
At Sun American, we produced the first Reverse Mortgage over 25 years ago. Since then, we’ve been doing Reverse Mortgages for individuals all over the great state of Arizona, and now also in Utah, California and New Mexico. See why so many trust Sun American Mortgage Company when it comes to understanding and securing a Reverse Mortgage!
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