Top 10 Things You Should Know About Reverse Mortgage Loans

 

Calculate Your Eligibility

  1. The available amount you can receive from a Reverse Mortgage loan depends on:  age, current interest rate, and the lesser of the appraised home value, sale price and government imposed lending limits.

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  2. As long as at least one borrower on title lives in the home as their primary residence and maintains the home in accordance with FHA requirements (including keeping taxes and insurance current) the loan does not become due.

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  3. There are several ways to receive the proceeds from a reverse mortgage: lump sum (receive a lump sum payment at closing), monthly payments, line of credit, or any combination of these options.

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  4. The home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.

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  5. When the home is no longer the primary residence, the loan, interest and other charges must be repaid.1 Any remaining equity will be passed on to the borrower’s heirs.  Provided the home is sold, the heirs will not be responsible if the amount of the loan exceeds the value of the home.

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  6. By law, the borrower has three business days to change their mind after closing.

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  7. Reverse Mortgage counseling is required. More information on Reverse Mortgage counseling can be found on the HUD Reverse Mortgage website

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  8. A Reverse Mortgage loan may be available regardless of whether or not the home was purchased with an FHA-insured mortgage.

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  9. Medicaid and other need-based government assistance may be affected by a reverse mortgage loan.

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  10. Loan proceeds are not taxable.2

 

1http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/rmtopten

2Consult your financial advisor and appropriate government agencies for any effect on taxes or government benefits.