Frequently Asked Questions What is a Reverse Mortgage?
Allows a homeowner convert a portion of the value in his or her home into cash. The value built up over years can be paid back to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. HUD's Reverse Mortgage provides these benefits, and it is federally-insured as well.
How much money can I get from my home?
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. The Federal Government recently increased the loan limit to $625,000.
Can I qualify for a HUD Reverse Mortgage?
To be eligible for a HUD Reverse Mortgage, you must be a homeowners aged 62 or older, occupy the home as your primary residence, pay off any existing liens at the time of settlement and speak with a HUD-approved housing counselor. You may speak with the counselor either face-to-face or over the phone.
Do I have to pay income tax on the proceeds?
NO. The proceeds received from a Reverse Mortgage are loan advances and not taxable income. For your specific situation, we recommend that you consult your tax advisor.
Will this income affect my Social Security or Medicare benefits?
NO. Money from a Reverse Mortgage is not considered income, nor does it affect Social Security or Medicare.
What types of homes are eligible?
Your home must be a single family dwelling or a two-to-four unit property that you own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Condominiums must be FHA-approved under the Spot Loan program. Can the lender take my home away if I outlive the loan?
No! Nor is the loan due. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keep the taxes and insurance current. You can never owe more than your home's value. This is guaranteed by the Federal Government.
Can I still leave my home to my heirs?
When you no longer live in your home as your primary residence, you or your estate will repay the money you borrowed, plus interest and other fees. The money left over after you have repaid the Reverse Mortgage will belong to you or your estate. None of your other assets will be affected by HUD’s Reverse Mortgage. |
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