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Jan 2008
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Reverse Mortgages
Happy New Year!
Now May Be The Time To Consider A Reverse Mortgage
Interested in a reverse mortgage, but have some questions? The following are some very common questions and answers.
1. How old do I have to be to qualify for a reverse mortgage? You must be 62 years of age or older.
2. What if my spouse is under the age of 62? Unfortunately, the younger spouse is not eligible to participate in the reverse mortgage program. All individuals on the title must be age 62 or older.
3. Am I qualified for a reverse mortgage if I currently have an existing loan on my home? Yes. But the existing loan must be paid off prior or at the time the reverse mortgage loan closes escrow. Quite often, the reverse mortgage is used to payoff the existing loan.
4. My property is held in a living trust. Do I qualify? Yes, as long as you are the primary trustee and are qualified by age.
5. My spouse is permanently in a nursing home. Can we participate? Yes. The requirement is that only one owner occupy the property as a principle residence.
6. Can I use the money from my reverse mortgage any way I want? Yes. You can use the money for things like medical expenses, home repairs, new vehicles, vacations, etc. There is no limitation to how you can use the money.
7. Does the IRS consider the monthly advances from the reverse mortgage income? No. The monthly advances are actually loan disbursements.
8. Can I be forced to sell or vacate my home if the money I owe on the loan ever exceeds the value of my home? No, so long as you continue to occupy the property as your principle residence. You cannot be forced to sell or vacate the property, even if the total amount you owe on this loan exceed the value of the property, or if the fixed term over which you received monthly payments has expired.
No deficiency judgment may result from your loan. FHA and Fannie Mae insurance covers any further obligation to the lender. However, a requirement of the loan is that property taxes, insurance and home maintenance remain current.
9. Will my heirs owe anything to the mortgage lender if I die? Upon your death, the loan balance consisting of principle paid to you or on your behalf, plus any accrued interest, becomes due and payable. Your estate may choose to repay the loan by selling the property or they may want to pay it off by other means so they can keep the home. If the loan should exceed the value of your property, your estate will owe no more than the value of the property; the mortgage insurance will cover any balance due to the lender. No additional financial claims may be made against your heirs or estate. You will never owe more than your property is worth.
10. If my home appreciates in value during the mortgage term, who will be entitled to that money? You or your estate is legally required to pay back to the lender only the outstanding balance due. Any money remaining after the mortgage is paid belongs to you, or upon your death, to your estate.
11. What if I decide to sell my home? If you choose to sell your home, the outstanding balance becomes due and payable to the mortgage lender. Any proceeds left over once the loan is paid belongs to you.
12. Why do I need a reverse mortgage - I don't have a mortgage now? Many seniors today are property rich and cash poor. A reverse mortgage allows senior homeowners to create a lifetime income stream to be able to live out their years with dignity and independence.
For further information on reverse mortgages, contact a qualified, licensed reverse mortgage consultant.
(Kathy Stone is a certified senior advisor and a reverse mortgage consultant with Allied Home Mortgage, and a member of the National Reverse Mortgage Lenders Association. For more information or to attend an upcoming reverse mortgage seminar, call 775-324-7122 or visit www.alliedmtgcapital.com.)