Reverse Mortgages: Frequently Asked Questions
Q. What are the age qualifications for a Reverse Mortgage?
A. Reverse mortgages are for homeowners at least 62 years of age with equity in their home.
Q. Is it possible to get a reverse mortgage if there is already an existing mortgage on the home?
A. Yes, but any existing mortgage must be paid off when the reverse mortgage closes. The funds from the reverse mortgage can be used for that purpose.
Q. Does a home in a "living trust" qualify for a reverse mortgage?
A. In most cases, the answer is yes. As a part of the loan process, you will need to provide a copy of the trust or a Certification of Trust for review by the lender and title company.
Q. Is there any tax liability of the reverse mortgage proceeds?
A. No. Funds received from a reverse mortgage are generally categorized as loan advances and not taxable income. Consult your tax advisor for more information.
Q. Can the interest charged on loan principal be deducted for tax purposes?
A. The interest that accrues on your loan is generally deductible when the loan is repaid, which occurs when the last borrower permanently leaves the property. Consult your tax advisor for more information.
Q. How do the proceeds from a reverse mortgage affect Social Security, Medicare or pension benefits?
A. The benefit from a reverse mortgage typically does not affect these benefits. Consult your financial advisor or local senior agency for more information.
Q. Will a reverse mortgage affect SSI or Medicaid benefits?
A. Generally a reverse mortgage will not affect these or most other means-tested benefits as long as the monthly cash advances are fully spent every month and not accumulated. However, programs do vary by state, so we strongly encourage you to confirm with your local senior services agency that your benefits will not be affected.
Q. What are the costs associated with a reverse mortgage?
A. Under our reverse mortgage programs, you will pay an origination fee, a mortgagee insurance fee and actual closing costs, including charges by the title and/or escrow companies. All of these costs can be financed as part of the initial loan advance. You will also receive disclosures of these costs as part of the loan process. It is also customary for the lender to collect a deposit for the appraisal at the time of application. This is the only lender fee you will be required to pay out of pocket.
Q. What is the amount owed when repayment is due?
A. You must repay the money that you have received plus accumulated interest and service fees (when applicable) up to the appraised market value of the home. The repayment is generally due within 6 months of the maturity event.
Q. Can I owe more than my home is worth?
A. A reverse mortgage is a "non-recourse" loan, which means that you, your heirs, or your estate cannot be required to repay more than the appraised market value of the home at the maturity of the loan. If the loan balance exceeds the value of the home, you, your heirs, or your estate will only be obligated to repay an amount up to the current appraisal value of the property.
Q. Does the lender take the title of the home?
A. A reverse mortgage is only a lien against the property; therefore, the title will stay in your name.
Q. If there are no monthly mortgage payments, am I responsible for any other expenses related to the home?
A. You are required to pay your property taxes, homeowners and flood (if required) insurance premiums and other expenses necessary to maintain the home.
Q. When does the loan need to be repaid?
A. Loan repayment is triggered when the home is sold or is no longer occupied as your primary residence. In a case of more than one borrower, repayment is triggered when the last borrower permanently moves out. Until one of these events take place, the last borrower may live in the home and not make any monthly mortgage payments to the lender.
Q. Will my heirs have to sell the property to repay the loan?
A. No, the loan can be repaid by refinancing the existing reverse mortgage with a standard mortgage loan.
Q. How will a reverse mortgage affect the future sale of the home?
A. The impact of a reverse mortgage is no different than that of a purchase or refinance mortgage. Repayment of the mortgage is due upon sale of the home.
A Better Mortgage Company is state licensed (broker license number 44404) and certified to offer reverse mortgages. We are among a limited number of lenders in Wisconsin able to offer reverse mortgages.
PLEASE CONTACT A SPECIALIST AT A BETTER MORTGAGE COMPANY TODAY AT 414-486-7929 FOR MORE INFORMATION! WE SERVE ALL OF WISCONSIN!
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A Better Mortgage Company
4379 S. Howell Avenue, Suite 22
Milwaukee, WI 53207
Phone: 414-486-7929
Fax: 414-486-7930
Toll Free: 800-731-ABMC (2262)
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