REVERSE
MORTGAGES More Questions and Answers
Q.
How does a Reverse Mortgage differ from a Home Equity Loan? WITH A HOME EQUITY LOAN, you must make regular monthly payments to repay the loan. These payments begin as soon as the loan is originated. To qualify for such a loan, you must earn a monthly income great enough to make those payments. If you fail to make the monthly payments, the Mortgage Lender can foreclose on you, and you can be forced to sell your home. In addition, you may be required to re-qualify for a Home Equity Loan each year. If you do not re-qualify, the Lender may require you to pay the loan in full immediately. WITH A REVERSE MORTGAGE, you do not repay the loan as long as your home remains your principal residence, your income is not considered when qualifying you for the loan, and there is no requirement that you re-qualify each year. Q.
Who is eligible for a Reverse Mortgage? Q.
What are the minimum and maximum amounts I can borrow? Q.
What types of proceeds payment plans are available with the
Reverse Mortgage loan? Under the TENURE option, you may receive equal monthly proceeds payments for as long as you occupy your home as a principal residence. Under the LINE OF CREDIT option, you may draw up to a maximum amount of cash at times and in the amounts of your choosing, as long as you occupy your home as a principal residence. The MODIFIED TENURE plan allows you to set aside a portion of loan proceeds as a line of credit and receive the rest in the form of equal monthly proceeds payments as long as you occupy your home as a principal residence. The MODIFIED TERM plan allows you to set aside a portion of loan proceeds as a line of credit and receive the balance as equal monthly proceeds payments for a fixed time period as specified by you. If you select either of the TERM plans, you can remain in your home after the end of the loan term without starting repayment. The same is true if you have withdrawn the maximum amount under a LINE OF CREDIT or MODIFIED TENURE payment plan. Remember, repayment of a Reverse Mortgage does NOT begin until you no longer occupy your home as your principal residence.
Q.
How will the amount of the monthly payment be calculated? Q.
Will Reverse Mortgage payments affect my Social Security,
Medicare, Supplement Security Income (SSI), or Medical Benefits? However, in the Federal Supplement Security Income Program beneficiaries must keep their liquid resources under certain limits. If you do not spend Reverse Mortgage advances in the month received, then such funds are considered part of your liquid resources and may adversely affect your eligibility for SSI. Therefore, a Reverse Mortgage borrower who also receives SSI should never draw more money than they actually need to spend that month. Regulations for state administrated programs such as Medicaid, AFDC, Food Stamps, and for state funded welfare programs (such as state supplements to SSI) all have different eligibility requirements. Therefore, we suggest that you consult a Benefits Specialist at your local Area Agency on Aging, or the local offices for these programs, to determine how Reverse Mortgage payments may affect your particular situation.
Q.
Will I have to pay any fees to obtain a Reverse Mortgage? Q.
Can I be forced to sell or vacate my home if the money I owe
on the loan exceeds the value of my home?
Q.
Will my heirs owe anything to the mortgage Lender if I die? Q.
If my home appreciates in value during the mortgage term,
who will be entitled to that money? Q.
What if I decide to sell my home? Q.
Can I sell my home to my children and continue to live in
it? Q.
What is Fannie Mae's role in the Reverse Mortgage program?
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