Reverse Mortgages FAQ’s
Preview the most common questions people ask with regards to getting a reverse mortgage.
1. What exactly is a “Reverse Mortgage”?
If you are a homeowner who wants to convert your current home equity into a monthly stream of income and you have a substantial amount of equity in your home, you may qualify for a reverse mortgage. Homeowner who are 62 years of age or older can qualify for a mortgage which actually pays them each month, based on their qualifying allocation.
You have a few choices for payments to you. You can get a lump sum, choose a stream a of payments or get some additional income to supplement your social security income or other retirement funds. Unlike a traditional home equity line of credit or 2nd trust deed mortgage, no repayment is required until the borrower no longer uses the home as his or her principal residence. The department of housing and urban development (HUD reverse mortgage provides these benefits and it is federally insured.
2. Will my spouse qualify for a HUD reverse mortgage?
Either spouse may qualify for this HUD program. Education is the starting point when is comes to a reverse mortgage. Both spouses will be required to meet with a HUD representative and be counseled with regards to all the benefits of the reverse mortgage program. This is mandated by Housing and Urban Development.
3. Can a loved one qualify for this type of loan if he or she did not originally purchase the home with FHA mortgage insurance?
Yes, first the home must meet the FHA guidelines to make a new loan that is currently an FHA loan. The new loan will be the reverse mortgage loan.
4. Will a Condominium qualify for this type of program?
Yes, if you have a condominium you can get a reverse mortgage so long as you meet the FHA guidelines under the reverse mortgage program guidelines. Also, you can own a 2-4 unit dwelling and a manufactured home. Remember all these kinds of property types must meet the underwriting guidelines under the FHA reverse mortgage program. Consult with a seasoned LendPlus Financial Group mortgage banker.
5. Is a reverse mortgage different than a equity line of credit?
Yes, a reverse mortgage allows you to take income from your homes current equity and pay you instead of you paying the bank. An equity line of credit allows you to get a cash amount out of you home in the form of a mortgage loan which you make payments to the bank for the portion you draw from “out of” the equity line of credit. The equity line of credit has a “call date” for what you have to pay the total balance do of remaining balance over time from you you used the equity line of credit. You, most often, pay a higher interest rate on an equity line of credit. You are always required to pay your current property taxes, home owners insurance., etc. That is your responsibility.
6. Does the lender take my home away from me if I pass on and still want to give the home to my kids?
No, debt is passed on to the estate or heirs. Your spouse cannot be forced to sell the home even if the loan exceed the value of the home. FHA /HUD guarantees that your spouse will receive the payments owed to them.
7. Will my spouse and I be able to pass on the home as an estate when we pass on?
Simply put, you will need to have the loan paid off from the proceeds of the sale of the home at the time of death. Any remaining balance from the remaining equity in the home will be available for you heirs. Of course the loan can be paid off from other sources and your heirs can still own the home.
8. How much money can we get when completing an FHA reverse mortgage under the (HECM) program?
LendPlus Financial Group will sit down with you and run some calculations to determine what sum of money you qualify. Of course, they will look at factors like the appraised value of the home, age of applicant(s) and amount of equity in the home. A loan agent can go over the details on the phone or in person.