Reverse mortgages are not always the easiest financial products to understand. For this reason, we’ve compiled a guide full of common questions relating to reverse mortgages. This reverse mortgage FAQ is a great guide for anyone who might have a few questions that are not yet answered. Also, if you have a question about reverse mortgages, feel free to ask it by contacting us, and we will be sure to answer it below.
Proceeds from a Reverse Mortgage – Reverse Mortgage FAQ
“How much money can I get out of my reverse mortgage?”
The specific amount of money that you are able to get out of your reverse mortgage depends on your age, the amount of equity in your home, and the value of your house. Since these factors differ from person to person, it can be difficult to give a one-size fits all answer. For this reason, we recommend that you use our Reverse Mortgage Calculator to get a better understanding of the amount of money that you may be able to take out from your reverse mortgage.
“What if I do not pay my existing mortgage?”
With a reverse mortgage, your existing mortgage is paid off via the proceeds from the reverse mortgage. This means that you would never have to worry about making another mortgage payment again. The only thing you would be responsible for are your property taxes and homeowner’s insurance.
“How long does it take to receive my funds?”
Once you begin working with a lender, you will be able to receive your funds pretty quickly. However, getting your reverse mortgage funds is a two way street, as the lender will need information from you, and the faster that you are able to provide the information to your lender is the faster that you will be able to get your reverse mortgage proceeds. From your first phone call to closing can take from 14 to 45 days, with most cases leaning closer to the 14 day mark, but every case is different.
“What if my mortgage balance goes up?”
Due to the way a reverse mortgage works, the old mortgage will be paid off, so this balance will decrease. The balance for the reverse mortgage will grow, and this is due to the interest being added to your reverse mortgage. If you do not want the balance to grow, you have the option to pay off the interest, but this is completely optional and not necessary.
“What can I use the money from the reverse mortgage for?”
Whatever you would like! Reverse mortgages are extremely flexible, and you can use the money from your reverse mortgage for anything from a home improvement to paying off medical bills to taking a vacation. Additionally, the money is yours, you are under no obligation to spend it in any particular way!
“How much do I have to pay to get a reverse mortgage?”
You will not incur any out-of-pocket costs. There are some costs associated with the reverse mortgage, but the costs are paid for out of the loan proceeds. However, these costs are legally capped to ensure that you are not paying too much for a reverse mortgage.
Qualifications and Requirements for a Reverse Mortgage – Reverse Mortgage FAQ
“Does my home qualify for a reverse mortgage?”
In most cases, yes! While a full appraisal is a required part of the reverse mortgage process, most homes are able to pass and be used for a reverse mortgage.
“What are the requirements for a reverse mortgage?”
There are not a lot of requirements. You must be a homeowner over the age of 62, intend to continue living in your house, and have enough equity in your house for the reverse mortgage. There are no medical or financial requirements that can stop you from getting a reverse mortgage.
“Can the bank/lender take away my home?”
The bank or lender is not able to take away your home. With a reverse mortgage, you do not sign your home over to the bank. You continue to retain title to the house, so you are the owner, just like a traditional mortgage.
Taxes and Benefits for Reverse Mortgage Holders – Reverse Mortgage FAQ
“Do I lose my social security or medicare benefits if I get a reverse mortgage?”
No, a reverse mortgage will not cause you to lose your social security or medicare benefits. However, you will need to use the proceeds from the reverse mortgage before one month. After this period, they will count as an asset if they simply sit in a bank account.
“Will I be taxed on the money I get from my reverse mortgage?”
No! Since a reverse mortgage is a loan advance, it is not actual income, and it is not taxed.
Advising for a Reverse Mortgage – Reverse Mortgage FAQ
“Why might a reverse mortgage be a good fit for me?”
A reverse mortgage might be a good fit for you if you have a lot of equity in your home, are over the age of 62, are able to meet the requirements, and are interested in supplementing your current income with additional proceeds.
“Why might a reverse mortgage not be right for me?”
A reverse mortgage may not be the right choice for you if you are looking to leave your home to your heirs or plan to move out of your house in the next two years. In this case, there are likely financial products that would be more applicable to your situation, and we would recommend speaking to a financial advisor or financial planner to discuss options.
Thanks for reading our Reverse Mortgage FAQ and feel free to let us know if you have any questions about reverse mortgages.