FAQ
What is Reverse Mortgage?
An FHA reverse mortgage (HECM loan), in its simplest definition, is a government-insured loan. It is a financial tool that allows you to access the equity in your home and convert it into cash.
How Does a reverse mortgage work?
With a reverse mortgage, there are no monthly mortgage payments from you. As one of your most important assets, your home usually holds a certain amount of equity. Because of this equity, when the time comes someday for the loan to be repaid, the value of the home when sold is able to re-pay the loan. Meanwhile, you are able to live in the home for as long as you like without making monthly mortgage payments. Your only obligations as a borrower are to continue to pay taxes and insurance on the home, keep it in good condition and comply with the other loan terms.
Will I still own my home with a reverse mortgage?
Yes. With all HECM loans, as long as you pay your taxes and insurance and otherwise comply with the loan terms, you will retain ownership of your home. The bank only takes title of your home if you do not meet these obligations. One of the most common misconceptions about reverse mortgages is this little piece of information. The truth is, as long as you pay your taxes and insurance and otherwise comply with the loan terms, you remain the owner of the home and may live there for as long as you wish.
What are my obligations as a borrower?
During your loan period, your obligations are to continue to pay for:
- Your homeowners insurance.
- Your property taxes.
- Your basic home maintenance.
What are the qualifications for a reverse mortgage?
To qualify for a reverse mortgage, you must be 62 years and older, own your home, and occupy it as your primary residence.
What are the benefits of a reverse mortgage?
Some of the important benefits are:
- You can never owe more than the value of your home.
- As long as you reside in your home and comply with the loan terms, you do not have to make payments on the loan.
- You will not lose Social Security or Medicare benefits.
- Your basic home maintenance.
- You are afforded greater financial freedom and control, providing you with security and dignity.
FURTHER INFORMATION –BORROWER OBLIGATIONS
Once you satisfy these eligibility requirements and after you obtain a reverse mortgage, you still have obligations to uphold. In order to enjoy all the features of a reverse mortgage loan, and ensure that you do not default on the loan, you are responsible for:
- Immediately using reverse mortgage loan funds to pay off any other mortgage you may have.
- Continuing payments on your home insurance, property taxes, and basic home maintenance.
- Complying with all the loan terms, such as continuing to live in the home as your primary residence.
Beneficial Reverse Mortgage Loan Rules
The regulations about loan payback are quite important as well. Luckily, the popular government-insured reverse mortgage loan, also called a Home Equity Conversion Mortgage (HECM), is non-recourse. This means that:
- If the loan is not repaid after maturity, no assets other than the home can be taken to pay off the reverse mortgage loan.
- If the loan debt surpasses the value of the home, the borrower will not owe more than the amount the home sells for.
HECM Government Regulations
In addition, the FHA has set some additional safeguards to protect borrowers and encourage responsible reverse mortgage loan use.
- Before loan approval, part of the process is to complete a counseling session with an FHA-approved counselor. This counselor will make sure you know all your options and have all the reverse mortgage information you need to be able to decide if this loan is best for your situation.
- In the first year of a reverse mortgage loan, you may only access 60% of your approved loan amount (or the amount required to pay off your current mortgage plus 10%, whichever is greater). After the first year, you may access the remaining amount. This is to encourage you to not pull from your equity too quickly.
Some of the important benefits are:
- You can never owe more than the value of your home.
- As long as you reside in your home and comply with the loan terms, you do not have to make payments on the loan.
- You will not lose Social Security or Medicare benefits.
- You are afforded greater financial freedom and control, providing you with security and dignity.
Are there any limitations on the use of my funds?
There are no limitations; you can use your funds for anything you choose.
What if I outlive the loan?
The loan is not due unless you default on paying any of your obligations such as taxes, insurance, and basic maintenance. But if you fulfill these obligations, you may continue living in the home for as long as you wish without making payments towards the loan.
Send us an email using the form below, We will get back to you soon!
Call Now!
Address
30700 Russel Ranch Road, Westlake Village, CA 91362
Business Hours
M- F 9AM to 5PM
And Saturday by appointment