Frequently Asked Questions

With a reverse mortgage, will I lose my house?
The fact is you run a greater risk of losing your home if you have a traditional mortgage. With a

reverse mortgage, you’re not making payments, so you will never “miss” a payment.

Will my heirs be shortchanged and resentful?
We have found that by far the vast majority of potential heirs prefer to see you use the funds to fix up

your home or travel or simply live in comfort with the extra cash to supplement your income.

I suggest you ask your heirs rather than guessing.

Are Reverse mortgage rates high?
The fact is that our reverse mortgage interest rates are right in line with conventional mortgages and in some situations, less!

Is a reverse mortgage a course of last resort?
The truth is, reverse mortgages have become a valuable estate planning tool.

Reverse mortgages have funded college trust funds for grandchildren, life insurance, or simply to

make retirement more enjoyable.

Once you put a reverse mortgage on your home, can you sell it?
You can sell your home at any time and pay off the loan from equity just as you would with a traditional mortgage. To qualify for a reverse mortgage, however, you must reside in the home.

If I have a low credit score will I qualify?
There is no income qualification or credit check. HUD is only interested in the amount of equity in the house or condo.

If the market value crashes will I owe more than the value of my home?
This is a NON-RECOURSE loan, which means you or your heirs will never owe more than the market value of the home at the time it is sold.

Am I eligible for a reverse mortgage?

To qualify for a reverse mortgage, you must:

-Be at least 62 years old. In the case of a couple or co-owners,
 both must be 62 if their names appear on the title to the home.
 (If one spouse is under 62, that person's name must be removed 
 from the title so the other person can qualify for the reverse mortgage).

-Be a homeowner with equity in your home. You may qualify even if you
 have an outstanding balance on your first mortgage. Single-family homes and
 qualified condominiums, townhouses, manufactured homes, and 1- to 4 -family
 owner-occupied residences are eligible. Reverse mortgages are available only
 for homes occupied by  owners as a principal residence.

How much money can I get?

This depends on a few factors, including your age at the time of loan closing, the value of your home, the amount of built-up home equity, and interest rates at the time of origination. Other factors are the type of reverse mortgage product and particular payment option you select.

What are my payment options?

You decide how to receive the money generated by a reverse mortgage. In general, your payment options are:

-An upfront lump sum payment;

-Line of credit;

-Fixed monthly payments for as long as you remain in your home

 (or a predetermined, shorter period); or, if you chose,

-Any combination of the above.

How much does a reverse mortgage cost? What are the upfront and closing fees?

Many of the same costs of home purchase mortgages apply to reverse mortgages. You can  expect

to be charged an organization fee, an upfront mortgage insurance fee (for FHA Home Equity Conversion Mortgages, or HECMs), an appraisal fee, and certain other standard closing costs.

In most cases these fees and costs are capped and may be financed as part of the reverse mortgage.

Do I need to get an appraisal of my home to get a reverse mortgage?

Yes. Since the value of your home is a factor in determining how much money you can get from a reverse mortgage, an appraisal is required. Normally, the lender will order the appraisal, which is

paid for by the borrower at the time of application.

Do I need a lawyer to apply for a reverse mortgage?

Legal counsel is not required. However, NRMLA encourages you to seek the advice of a legal,

tax, or financial advisor before committing to a reverse mortgage.

Am I required to receive counseling before I get a reverse mortgage?

Yes. Counseling , one of the safeguards of reverse mortgages, is required for all three current reverse mortgage products before you can obtain a loan. Counseling is an educational session at which you are informed about reverse mortgages and other options. You can get the name of a local counseling agency or qualified telephone counselor from a reverse mortgage lender or by calling AARP (toll free 1-800-209-8085), Fannie Mae's Homepath service (toll free 1-800-732-6643), or HUD's Housing Counseling Clearinghouse (toll free 1-800-509-4287) or, just ask your Alliance Financial Mortgage

consultant to recommend one.

Is the money from a reverse mortgage taxable income? Will it affect my Social Security benefits or other government benefits?

Funds from a reverse mortgage are tax-free; it's your money, not additional income. A reverse mortgage does not affect regular Social Security or Medicare benefits. To assess the impact, if any,

on other federal or state assistance or medical programs, you may wish to consult with your local Area Agency on Aging (to locate, call 1-800-677-1116, or visit http://www.eldercare.gov),

a reverse mortgage lender or a tax attorney.

Who owns title to my home while my reverse mortgage is outstanding - the bank or me?

You retain title to your home during the period when you have a reverse mortgage, just the same as with a regular home purchase mortgage.

Am I required to pay anything during the course of the reverse mortgage loan?

No. The flow of payments is reversed during the term of the reverse mortgage - the lender pays you. However, you are responsible for keeping up payments for your homeowner's insurance and

property taxes, and to maintain the condition of your home.
 

Are there any limits on how I can use the funds from a reverse mortgage?

No. Borrowers have used reverse mortgages for a variety of purposes, including paying health care expenses, supplementing retirement income, financing home improvements or home modifications, paying for education and classes, or visiting friends and family. Some have used a reverse mortgage to purchase recreational vehicles, start a small business , and travel the Amazon. Some have used reverse mortgages to eliminate expenses by paying off mortgages and credit card debt. The only limit on how you use a reverse mortgage is your imagination.

What is the interest rate on a reverse mortgage and how is it determined?

The interest rate varies by type of reverse mortgage. As a matter of fact, in many cases the interest

rate is lower than on a conventional mortgage.

How much will be owed when my reverse mortgage comes due?

The amount that is owed to the lender typically included the amount borrowed to date, the amount

of accrued interest, accrued mortgage insurance premiums (for HECM), servicing fees, and any other costs and fees financed as part of the loan amount. In no event will the repayment amount exceed the value of the home at the time that the loan comes due. There are no prepayment penalties for the current reverse mortgage products.

What happens if I move out of my house after I get a reverse mortgage?

A reverse mortgage comes due and must be repaid when the borrower dies or permanently moves out of the home. Similarly, if you sell your house, the reverse mortgage comes due.

What happens when my house gets passed to my heirs?

Once your home is passed to your heirs, the reverse mortgage comes due. Your heirs may either pay the balance due on the reverse mortgage and keep the home, or sell the home and use the proceeds

to pay off the reverse mortgage. If they sell the home, they get to keep any excess sales proceeds.