Listed below are some of the frequently asked questions with regards to reverse mortgages. We have tried our best to present accurate and correct answers to all of them. In case you are in any doubts or you need further clarification in any of them, please feel free to contact us and we shall be glad to present you with a prompt response.
This is a special type of home loan advanced towards the senior members of the society and it gives them the ability to access a portion of their equity tax free. Factors that affect the amount of loan that one gets include their age, the value of their homes and the current interest rates. Unlike other types of conventional loans or the home equity loans, reverse mortgage loans do not require the homeowners to make any form of repayment unless they sell the home, move out of it permanently or they die in which case the lender will assume ownership of the home.
Reverse mortgage loans are primarily designed for the seniors who are 62 years old and above. In addition to this, they must own a property and use at as their primary residence.
Yes. But in this case, you must ensure that the existing mortgage is paid off at the time of closing. You can use part of the proceeds from the reverse mortgage to meet this debt.
The following types of homes do not qualify for the reverse mortgage: secondary residences, vacation homes, manufactured homes, mobile homes, homes constructed on lease lands and rental homes comprising of more than four units.
The IRS considers proceeds from reverse mortgages as loan advances hence they do not attract any taxes. But it would be a good idea to consult with your tax attorney for more information about this.
You can still have access to reverse mortgages if your home is on a living trust but in order to do so, you must review the trust documents to reflect on this new development.
No. All the proceeds from the reverse mortgage will not have any effects on your social security, pension or Medicare benefits. Kindly contact your financial advisor for more details regarding this particular issue.
As a borrower, you will be required to meet the closing costs, origination fees, and title and escrow charges. But you can use the reverse mortgage to foot all these costs so that you pay absolutely nothing.
No. This is a loan against your property and you will only repay the loan balance or amount equivalent to the home value.