Is a Reverse Mortgage right for me?
Top 10 Facts You Need to Know
Reverse Mortgage Process
Frequently Asked Questions

Is a Reverse Mortgage right for me?

Are you 62 or older?
Do you own your home (or owe a small balance)?
Do you want additional income now?
If so, a Reverse Mortgage may be right for you!


Top 10 Facts You Need to Know:

1. A Reverse Mortgage is only available to homeowners 62 years or older.


2. There are no income qualifications.


3. The borrowers retain title to the property and can continue to live in and own the home for as long as they choose.


4. There are no monthly mortgage payments during the life of the loan.


5. Proceeds are tax-free and can be used for any purpose; they may be paid out as a lump sum, in monthly payments, as a line of credit, or any combination.


6. The loan amount depends on the borrower’s age, appraised value of the home, current interest rates, and the type of reverse mortgage selected.


7. A Reverse Mortgage isn’t repaid until the borrower moves out of the home permanently.


8. The repayment amount cannot exceed the value of the home, regardless of loan balance.


9. Once the loan is repaid, any remaining equity is distributed to the borrower or the borrower’s heirs/estate.


10. The home doesn’t have to be owned free and clear to qualify for a Reverse Mortgage.

Reverse Mortgage Process:

1. Awareness: Homeowner learns about a reverse mortgage from a news article, advertisement, word-of-mouth, etc.


2. Upfront Education: Homeowner contacts a reverse mortgage lender or the National Reverse Mortgage Lenders Association to learn more about reverse mortgages.


3. Counseling: Homeowner seeks counseling from a local HUD-approved counseling agency, or a national counseling agency, such as AARP (800-209-8085), National Foundation for Credit Counseling (866-698-6322), or Money Management International (877-908-2227). Counseling is required for all reverse mortgages and may be conducted face-to-face or by telephone. By law, a counselor must review (i) options, other than a reverse mortgage, that are available to the prospective borrower, including housing, social services, health and financial alternatives; (ii) other home equity conversion options that are or may become available to the prospective borrower, such as property tax deferral programs; (iii) the financial implications of entering into a reverse mortgage; and (iv) the tax consequences affecting the prospective borrower’s eligibility under state or federal programs and the impact on the estate or his or her heirs.


4. Application/Disclosure: Homeowner fills out a loan application and selects a payment plan, whether fixed monthly payments, lump sum payment, line of credit, or a combination of these. Lender discloses to homeowner the estimated total cost of the loan, as required by the federal Truth in Lending Act. Homeowner provides lender with required information, including verification of Social Security number, copy of deed to home, information on any existing mortgage(s), and counseling certificate.


5. Processing: Lender orders an appraisal, which the homeowner pays for (either upfront or with loan proceeds), to place a value on the home. The appraiser makes sure the physical condition of the property meets FHA guidelines. If any structural defects are found, the homeowner must hire a contractor to complete the repairs after the reverse mortgage closes.


6. Underwriting: After receiving all pertinent information and data, lender finalizes loan parameters with homeowner (i.e., determining payment option, frequency of loan interest rate adjustments) and submits loan package for final approval. It can take anywhere from 4-8 weeks to underwrite a loan package.


7. Closing: If the loan package is approved, closing (signing) of loan is scheduled. Interest rates are calculated. Closing papers and final figures are prepared. Closing costs are normally financed as part of the loan. Lender or title company has homeowner sign loan papers.


8. Disbursement: Homeowner has three business days after signing papers in which to cancel the loan. Upon expiration of this period, the loan funds are disbursed. Homeowner accesses the funds in the form of the payment option selected. Any existing debt on the home is paid off. A new lien is placed on the home. The homeowner may use the loan proceeds for any purpose. The loan “servicer” manages the account and is responsible for disbursing monthly payments to the homeowner (if this option is chosen), advancing line of credit funds upon request, collecting any repayments on the line of credit, and sending periodic statements.


9. Repayment: Homeowner doesn’t make any monthly mortgage payments during the life of the loan. The loan is repaid when the homeowner ceases to occupy the home as a principal residence. The loan may be repaid by the homeowner or the heirs/estate, with or without a sale of the home. The repayment obligation can’t exceed the home’s value or sales price.

Frequently Asked Questions:

Q. How much money can I receive?
A. The amount of money you receive is dependent upon several factors: your age, the value of your home, current interest rates and the specific plan you choose. Your Loan Advisor can help you determine which plan best meets your needs. While each individual's situation is different, as a rule of thumb the older you are and the higher your home's appraised value, the more money you receive.

Q. What are the costs?
A. Costs vary from one program to another. That's why we offer a variety of programs to meet a variety of needs. Most reverse mortgages, however, have costs similar to traditional mortgages such as interest charges, origination fees, closing costs, inspections and insurance.

Q. When does the loan become due and payable?
A. As long as property taxes and home insurance are paid, and the home is kept in good working order, the loan is due and payable when the borrower sells the property, permanently leaves the home, or passes away.

Q. Can we make the process easy?
A. We have worked hard over the past several years to simplify the process. We believe the first step is the most important. That's when you and your Loan Advisor review your goals and objectives and decide which plan best meets your needs. Once you are comfortable that you are making a good decision the process moves forward.

Q. Who should I look to for advice?
A. Decide who you trust, then discuss your intentions with them. It may be your attorney, a financial advisor, AARP, a family member or close friend. We want you to feel confident in your decision.

Q. Are there any restrictions on what I can do with my money?
A. You can use the proceeds to whatever end you choose. After all, it is your money.

Q. Whose name is on the home's title?
A. Yours. The borrower retains title to the property. A reverse mortgage is a lien just like a traditional mortgage.


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