FAQs - Reverse Mortgage

A reverse mortgage is a loan that allows adults (who are at least 62 years old) to convert part of the equity in their properties into cash without having to sell their home, give up the title to the property, or take out a new mortgage loan.

To qualify for a reverse mortgage, you must:

• Own a home. You may qualify even if you still have an outstanding balance on your first mortgage.
• Use the home as your primary residence.
• Be 62 years of age or older - If you are a couple and both are registered on the title deed, you must each meet the age requirement.
• Exclude co-owners under 62 years of age from the property title.

Condominiums, single-family homes, pre-manufactured homes (or mobile homes), and homes that have 1 to 4 owners are eligible.

The money from the reverse mortgage can be obtained in different ways:

• One-time payment - you receive the entire sum.
• In monthly installments - you can decide for the period of time you want to receive the monthly amount or request it for the rest of your life.
• On a line of credit - this will allow you to have the amount of money you need or want at a certain time.
• A combination of the above options - you can choose a cash advance and receive the remainer in monthly installments or place it in a line of credit.

You can use the funds for whatever you want. For example:

• Cover medical expenses or medications
• Supplement retirement income
• Repair or modify your home
• Pay for your grandchildren's education
• TravelVisiting family and friends
• Buy an RV
• Start a business
• Cancel current mortgage or consumer debts, etc.

The only limit on to how to use a reverse mortgage is your imagination.

The usual reasons for a loan to be repaid are as follows:

• Death of both spouses
• Sale of the property
• Permanent move from the property - neither owner resides in the property for a full year.

However, creditors may request that the loan be repaid if you:

• Stop paying property taxes
• Don't keep the home in good condition
• Don't pay mortgage insurance
• File for bankruptcy as homeowners
• Leave your part of the home
• Commit fraud or make a false statement on the application
• Are subject to a compulsory purchase or court ruling involving your home

You hold the title to your property during the period when you have a Reverse Mortgage, just like the regular mortgage for the purchase of a home.

Yes. As the value of your property is an important factor in determining how much money you can get with a reverse mortgage, an appraisal is required. Normally, the creditor orders the appraisal, which is paid by the customer at the time of the request. Some creditors may cover this cost.

If there are heirs, they must transfer or sell their share so that the property becomes yours alone. The loan is made in your name and you can use the funds to pay the heirs their share.

As soon as your house passes into the hands of your heirs, the reverse mortgage has to be paid off. Your heirs can pay the balance due on the invested mortgage and keep the property, or they can sell the property and use the funds to pay off the reverse mortgage debt. If they sell the property, they will be able to retain any profits after the loan is repaid. If the accumulated debt is greater than the value of the property at that time, the heirs are responsible for paying the accumulated total.

The amount of debt in the reverse mortgage is the sum of all the money received plus the interest that has accrued.

• If the amount is less than the value of the home at the time of paying off the loan, the difference goes to you or the heirs.
• If the amount is greater than or equal to the value of the home, then the total debt will be limited to that value if the heirs do not wish to retain the property and sell it to a third party who is not related to them.
• If the amount is higher and the heirs wish to retain the property, then they would have to assume the entire debt regardless of the value of the home.

CCCS has certified Reverse Mortgage counselors who can guide you. To get an appointment, please call 1-800-7171-2227 or 888-692-2650. If you would like to start a counseling session online, you can do so now.