Reverse Mortgage FAQs

V.I.P. Mortgage’s Reverse Mortgage Team believes each reverse mortgage is a personal, individualized product to help you meet your retirement goals. It is one that should be handled delicately with hands-on, face-to-face meetings to ensure you are well educated on all of your options and decisions.

Below is a list of frequently asked questions that can help you make an informed decision about using a Reverse Mortgage.

A Reverse Mortgage Loan is a loan that helps borrowers who are 62 years and older to convert a portion of their home equity into cash flow – tax free. It is a safe, non-recourse mortgage solution for different types of retirement strategies.

The loan repayment isn’t required until the last surviving borrower no longer occupies the home. The borrower or the heirs would sell the home and payoff the exiting reverse mortgage. The heirs also have the option of paying off the reverse mortgage and keeping the home.

  • If you are 62 years or older and be the title holder of your home.
  • If you have sufficient equity in your home and you must meet financial eligibility established by HUD.

You can still qualify for a reverse mortgage loan, you just have to use a portion of the funds from the reverse mortgage to pay off any existing liens on the property.

Yes, you maintain ownership in your home. A reverse mortgage only has a lien on your property like any other mortgage. You are responsible for paying your property taxes, homeowners insurance and maintain the property to FHA standards.

There is no risk of losing the home when you die. Your heirs simply need to pay off the Reverse Mortgage loan to obtain ownership.

No, the money is not considered income, therefore is tax free.

Single Family Residence, 1-4 unit properties, FHA approved Condos, PUD’s and Manufactured homes built after 1976.

When considering a reverse mortgage, a borrower has several options from which to choose, all of which are subject to the Initial Disbursement Limit:

  • Tenure plan – the borrower with receive equal monthly payments from the lender for as long as they occupy the home as a principal residence.
  • Term plan – the borrower will receive equal monthly payments from the lender for a fixed period of time selected by the borrower.
  • Line of Credit plan – the borrower receive advances in unscheduled payments or in installments, at times and in the amount of their choosing until the line of credit is exhausted.
  • Modified Term or Tenure plans – the borrower my combine a line of credit with monthly payments. The borrower must set aside a specified amount of money at closing for a line of credit on which they can draw until the line of credit is exhausted.

Yes. As the homeowner you are still responsible for the general upkeep of the property as well as taxes and insurance.

The three main factors in determining the loan amounts are based on the youngest borrower’s age, the value of the home and the product that you choose.

If you still have a mortgage, you must first pay off the existing mortgage. If you don’t owe on your home, you can choose to use the money any way you want. You can use the monies for home renovations, upgrades, health care costs, and unplanned expenses, major new purchases (i.e. 2nd home or new car.) The idea is to have additional cash flow at your fingertips in retirement.

The answer is typically no. However, regulations vary for the Federal Supplemental Security Income program and for state-administered programs such as Medicaid and food stamps.

No. You can pay off the loan at any time with no penalties.

VIP Mortgage has Certified Reverse Mortgage Professionals (CRMP), specializing in helping older borrowers convert a portion of the equity in their home into cash flow. Call Steve Wolf today at 520-975-1900 to learn more.

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