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Frequently Asked Questions About Reverse Mortgage Loans

Obtaining a reverse mortgage loan is a significant decision. It’s normal to have questions, and we hope these answers help put your mind at ease. If you don’t see your question here, feel free to call one of our loan advisors at 1-866-751-2606.

What is a reverse mortgage loan?

A reverse mortgage is a loan that allows you to access a portion of your home equity without making monthly mortgage payments¹. You retain the title to your home, and the loan typically becomes due when the last borrower permanently leaves the home or fails to meet loan obligations. You’ll never repay more than the appraised value of your home when the loan comes due, provided the home is sold to repay the loan.

If no monthly payments are required, how is my reverse mortgage loan paid back?

To repay the loan balance, you or your heirs can either sell the home or pay off the loan and keep the property.

How do I qualify for a reverse mortgage loan?

To qualify, you must:

• Be age 62 or older (in most cases)
• Be the titleholder of your home
• Have sufficient equity
• Meet financial eligibility criteria established by HUD

What if I have an existing mortgage?

That’s okay. However, a portion of the funds from your reverse mortgage (or another source) must be used to pay off your existing mortgage at closing.

Is my home eligible?

Eligible properties include:

• Single-family residences
• 2- to 4-unit dwellings
• FHA-approved condominiums
• Manufactured homes that meet FHA requirements

Will I still own my home or will I lose it?

You will still own your home and may remain in it as long as you:

• Occupy it as your primary residence
• Pay property taxes and insurance
• Maintain the home according to FHA standards

Are there property and insurance requirements?

Yes. Since you retain ownership, you’re responsible for:

• General maintenance and upkeep
• Ongoing property taxes and insurance

You may use reverse mortgage funds to cover these expenses.

What types of loans are available?

All loans offered are Home Equity Conversion Mortgages (HECMs). You can request a comparison of available options to better understand which FHA-insured product best fits your needs.

How much of my home’s equity can I access?

Loan amounts vary based on:

• The reverse mortgage product selected
• Age of the youngest borrower
• Current interest rates
• The lesser of the appraised value, sale price, or FHA lending limit

You may need to set aside funds from the loan proceeds to cover taxes and insurance.

How can I use the money?

After paying off any existing mortgage, you can use the funds however you choose, including:

• Paying off high-interest debt
• Covering medical expenses or in-home care
• Making home improvements
• Managing daily living expenses

There are no restrictions on how you use the net proceeds.

What costs are involved?

As with any loan, there are closing and other fees. Most can be financed into the loan. The HUD counseling fee is typically the only out-of-pocket expense.

Will I have to pay any taxes?

Generally, reverse mortgage proceeds are not considered taxable income. However, you must continue paying property taxes. Consult a financial advisor or government agency for guidance on tax implications or effects on benefits.

Will this loan affect my Social Security or Medicare benefits?

HECM payments typically do not affect Social Security or Medicare. However, they may impact:

• Federal Supplemental Security Income (SSI)
• State-administered programs like Medicaid, Aid for Dependent Children (AFDC), and food stamps

Consult a benefits specialist at your local Area Agency on Aging or relevant offices to understand how HECM payments may affect your situation.

How will I receive the available funds?

You may choose from:

• A line of credit
• A single lump sum²
• Monthly installments
• A combination of these options

Will my family or estate ever owe more than the value of my home?

No. You’ll never repay more than the appraised value of your home when the loan comes due, provided the home is sold to repay the loan.

What if I want to leave my home to my children?

You can still leave your home to your children or anyone you choose. When the loan becomes due, your heirs may pay off the full loan balance to retain ownership.

Will I incur any penalties if I decide to pay back the loan early?

No. You may repay the loan at any time without penalty.

If my parents have a reverse mortgage, what should I do in the event of their passing?

Contact the loan servicer to notify them of the borrower’s passing. The servicer’s contact information is typically found on the monthly statement. Once notified, the servicer will guide the heirs through the next steps.

¹ You must live in the home as your primary residence, continue to pay required property taxes and homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these obligations may result in loan default and foreclosure.

² This disbursement option is only available with a fixed-rate loan.