What are some common questions about Reverse Mortgages?
Q: Will I
maintain my home ownership?
A: Yes. A lien will be placed on your property which will be security for
the Reverse Mortgage loan, but home ownership is maintained by the borrower.
Q: What happens if a
joint borrower dies?
A: The provisions of the Reverse Mortgage loan remain in effect. The
surviving borrower may continue to request funds from the program until funds
are exhausted.
Q: How will this
affect my heirs and their inheritance?
A: Depending on how long you participate in the program, home equity may be
preserved for inheritance. When the loan balance (consisting of funds received,
interest and fees) is repaid, remaining equity stays with your estate. The home
may be sold or your heirs may use other financial means for repayment (for
example, life insurance proceeds) and keep the home in the family. Your
remaining assets are completely protected.
Q: What happens if I
want to sell my home or move?
A: If you sell your home or permanently move out, the loan balance needs to
be repaid. The program does not restrict your decision to sell your home.
Q: If I move out or
die, does the lender take my home?
A: When you move, you will be responsible for using the proceeds from the
sale to repay the loan balance. If you die, your estate needs to contact us to
determine how the loan balance will be settled. Your estate is also responsible
for the sale of your home or determining other repayment options.
Q: Will a Reverse
Mortgage loan affect my right to public benefits?
A: A Reverse Mortgage loan will not affect your rights under Social Security
or Medicare. It might affect your rights under Supplemental Security Income (SSI),
Medicaid, Food Stamps, Fuel Assistance, and other income-eligible services.
Q: Must I hold title
to my home jointly with my spouse or other joint borrower?
A: Yes. All borrowers under the Reserve Program must hold title to the
property.
Q: What are the fees?
A: Most fees can be included in your loan balance - out-of-pocket cost is
virtually eliminated. A good faith estimate of fees is provided at application.
Closing fees include an appraisal, survey, title policy, credit report, attorney
and recording fees. HUD charges a 2% mortgage insurance premium and there is a
lender origination fee.
Q: Are the funds
received from a Reverse Mortgage loan taxed by the Internal Revenue Service?
A: No. You should also know, though, that the accrued interest on the
Reverse Mortgage loan is not tax deductible. If you are unsure about this issue,
you should seek competent tax advice.
Q: Can I repay my
loan?
A: You may make partial or full repayment on your balance at any time and
apply any amount. Full repayment will terminate the loan program.
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