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What is a reverse mortgage?
A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid 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.
Do I have to own my home free and clear to qualify?
No. You can use the proceeds of a reverse mortgage to pay off your existing mortgage or equity loan. Many people get a reverse mortgage for this exact reason: to get rid of their monthly payments permanently.
Will there be any tax liability?
No. Currently the IRS treats monies received from a reverse mortgage as a loan advance, and it is therefore not considered taxable income. For more specific information, consult a tax advisor.
Can I still qualify if my property is held in a trust?
Yes, subject to the review of trust documents, most homes in Revocable Living Trusts can qualify for a reverse mortgage.
Will a reverse mortgage affect Social Security, Medicare or my pension benefits?
Proceeds from a reverse mortgage do not affect these benefits. For advice concerning your specific situation, should contact your financial advisor.
If something happens to me will my spouse continue to receive the benefits of our reverse mortgage?
Yes, as long as you are joint borrowers on the reverse mortgage, and your spouse wants to remain in the home.
Are there costs associated in obtaining a Reverse Mortgage?
Yes. There will be the typical mortgage costs associated with obtaining your reverse mortgage. These typically include (but are not limited to) a mortgage insurance premium for the FHA programs and a loan origination fee. All fees can be financed as part of the loan, meaning no out-of-pocket expenses to you.
If I get a reverse mortgage, can I sell my home?
Yes. If you decide to sell your home, the reverse mortgage is like any other loan and the outstanding balance must be paid off at closing. There are no restrictions preventing you from paying off your loan in part or in full, and there are no prepayment penalties or charges.
Can I still leave my home to the kids?
Yes. Your home will always remain your home. You may leave it to whomever you wish. When you pass away, your heirs will have options for paying off the loan, including selling the home or refinancing the outstanding balance, among other options. After the debt is repaid, any remaining equity will go to your heirs.
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ReverseChoices@MaryJoLafaye.com
