Answers to Frequent Reverse Mortgage Questions
1. What is a reverse mortgage and do I qualify?
A reverse mortgage is a unique loan that allow homeowner(s) 62 years of age and older to draw on the equity in their home, which is paid to the homeowner(s) in cash. The unique aspect of this loan is that it does not require repayment until the homeowner(s) no longer reside in the residence. Created by The U.S. Department of Housing and Urban Development (HUD), this federally insured private loan goes to help those in the senior population meet their financial needs and ease money worries for greater peace of mind.
2. Is my home eligible for a reverse mortgage?
Homes eligible for a reverse mortgage include single-family homes, detached homes, townhouses, and two-to-four unit properties that are owner-occupied. Condominiums must be FHA-approved
3. Why shouldn't I choose a bank home equity loan instead of a reverse mortgage?
Reverse mortgages are so popular because they pay cash that does not need to be repaid as long as you remain in your home. On the other hand, attaining a home equity loan (or a second mortgage) requires you have sufficient income to cover the debt—plus, you must continue to make monthly mortgage payments. With a reverse mortgage, you do not make monthly mortgage payments and the federally insured loan protects you from foreclosure.
4. How much cash can I expect to get?
The cash you can potentially receive is based on your age, current interest rate, and the appraised home value or FHA's mortgage limits for your area, whichever is less. For instance, an older person with a higher value home will be eligible for more than a younger person with a lower value home at the same interest rate.
5. What happens if I outlive the loan? Will I have to repay the lender?
No. If you or one of the borrowers lives in the home and continues to pay the taxes and insurance, you will not need to repay the loan.
6. Must my house be paid off for me to qualify for a reverse mortgage?
No. You do not need to pay off your home to qualify. And it is not required that you meet an income or credit criteria. Plus, you will continue to hold the title to your home.
7. Do I have to pay taxes on the cash payments I receive?
The cash you receive from a reverse mortgage is not subject to individual income taxation. But, since you hold the title to your home, you are still responsible for property taxes, insurance, utilities, fuel, maintenance, and other home-related expenses. Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole.
8. How will this loan affect my estate and how much will be left to my heirs?
Once the last surviving borrower dies, sells your home, or no longer resides there as the primary residence, you or your estate is responsible for repayment of the money you received from the reverse mortgage, plus interest and other fees. Any remaining equity belongs to either you or your heirs. A “non-recourse” clause can prevent either you or your estate from owing more than the value of your home when the loan is repaid.
9. How do I receive my payments?
Reverse mortgage payments can be received several ways: Discuss these options with your Reverse Mortgage Specialist to see which one works best for financial goals.
Tenure, Term, Line of Credit, Modified Tenure
10. How Much Do you qualify for?
Call Reverse Tennessee at (615) 200-8677 or visit our Reverse Mortgage Options page to fill out our contact form and get additional information.