1.
What is a Reverse Mortgage?
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A reverse mortgage is a special type
of loan, which enables you to convert the equity in
your home into tax-free cash. You may receive the
money in the form of a lump sum, monthly payments, a
line of credit, or a combination of these options.
There are no income, employment or credit
qualifications and there are no monthly payments to
make. The loan is not repaid until you permanently
leave your home. Reverse Mortgages are backed by the
U.S. Government or major financial institutions.
2. Do I qualify for a Reverse Mortgage?
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You and any co-borrower must be at
least 62 years of age, own your home, and occupy the
home as your primary residence.
3. If there is an existing mortgage or loan on my
home, can I still qualify?
An existing mortgage or loan must
be paid off. The reverse mortgage is often used to
pay off these existing loans.
4. How much money can I receive with the Reverse
Mortgage program?
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The amount of money you can
receive is determined by the value of your home, the
age of the youngest borrower and the current
interest rate. We will help you in evaluating your
options and calculate the maximum amount of money
that will be available to you. Feel free to call us
for a free evaluation.
5. How do I receive the money?
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You can receive your money as a
lump sum in cash (all at once), monthly payments or
a line of credit. You can also do a combination of
these options. We will help you decide which option
works best for you. Note: you can change the way you
receive your money as often as you like for a small
fee.
6. How can I use the money I receive, are there
restrictions on how I can use the money?
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You can use the money any way you
choose:
- Supplement your
income / pay for monthly expenses
- Home improvements
- Pay off a current
mortgage and other debt Medical bills
- Long Term Care
Insurance or other insurance products
- Buy a new car
- Travel
- Gifts for your
grandchildren or family
- Purchase a new
home
There are absolutely no restrictions on what you can
do with your money.
7. Are there any costs involved with the Reverse
Mortgage program?
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Reverse Mortgages have costs just
like forward mortgages. These typically include an
appraisal, loan origination fee, title insurance and
recording fees. Most of these can be financed into
the loan so you do not need to pay for them out of
pocket. The U.S. Government insured loan program
also has a FHA (Federal Housing Administration)
insurance premium. We are happy to go over and
explain each cost with you as well as provide a
good-faith estimate.
8. What about interest, how is that charged?
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Reverse Mortgages are adjustable
rate mortgages (ARM) and are tied to market indexes.
The initial rate is set at closing and then either
adjusts monthly or annually. These rates do not
affect monthly payments and only your outstanding
loan balance is subject to interest. A change in
interest rates will not affect the amount or number
of loan advances that you can receive, but it will
cause the loan balance to grow at a faster or slower
rate. We understand this may be confusing and are
happy to explain each option with you. The following
shows how rates are set for the Home Equity
Conversion Mortgage (HECM).
Monthly
Adjustable Rate:
1-Year U.S. Treasury Security Rate + 1.5% There is
no limit on how much the rate can change by each
month and there is a lifetime interest rate cap
equal to 10% above the initial interest rate.
Annual Adjustable Rate: 1-Year U.S. Treasury
Security Rate + 2.1% There is a 2% limit on how much
the interest rate can change by each year and a
lifetime interest rate cap equal to 5% above the
initial interest rate.
9. Will the income from the Reverse Mortgage affect
my Social Security or Medicare benefits?
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Reverse Mortgage income is
tax-free and will not affect Social Security or
Medicare benefits. Other benefits can be affected
and we suggest that you contact your local Area
Agency on Aging (AAA) at 1-800-677-1116 for
specifics.
10. When is the Reverse Mortgage due and when is it
payable?
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When the borrower
permanently leaves the home, the reverse mortgage is
due and payable. You or your heirs will have the
option to sell or refinance the home and keep any
remaining equity.
11. Do I still continue to own my home?
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Yes, you retain full ownership of
your home when you obtain a reverse mortgage. As
with any mortgage, the lender has a lien against
your property. When the loan is repaid any remaining
equity stays with the homeowner or their heirs.
12. I'm ready to get started ... what do I do next?
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Get started by calling us to
discuss your situation and needs. We are committed
to helping you through the reverse mortgage process
and are happy to visit with you at your convenience.
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