Reverse Mortgages: Frequently Asked Questions
By AGIS Staff, AGIS Network
Despite the growing popularity of reverse mortgages, some of the most basic facts about them remain widely misunderstood. Here are answers to a few of the most commonly asked questions.
How much money can I get from a reverse mortgage?
The amount you can receive depends on several factors, including your age, the value of your home, the amount of home equity you've built up, interest rates, and the payment options you choose.
By getting a reverse mortgage, am I giving my home to the bank?
No. You own your home and retain title throughout the life of a reverse mortgage. Even if the money runs out, you can stay in your home as long as you wish. As the homeowner, you are responsible for keeping up payments on your homeowner's insurance and property taxes, and for maintaining the condition of your home.
When does a reverse mortgage have to be repaid?
Once you permanently move out of your home or pass it on to your estate, the loan must be repaid. You or your heirs can either pay the balance due and keep the home, or sell the home and use the proceeds to pay off the reverse mortgage.
How much will my heirs owe?
The amount owed includes the amount borrowed, the accrued interest, service fees, and any other costs or fees financed as part of the loan. In no case will the repayment amount exceed the value of the home at the time the loan is due.
What kind of fees are involved?
Many of the costs associated with regular mortgages also apply to reverse mortgages. You'll be charged an origination fee, an appraisal fee, and other standard closing costs. For most reverse mortgages, these fees are capped at a defined amount and may be financed by the loan, so there's usually little out-of-pocket expense.
Does a reverse mortgage affect my eligibility for Social Security or other benefits?
A reverse mortgage doesn't affect your regular Social Security or Medicare benefits, but it may affect the benefits you receive from the federal Supplemental Security Income program or from state-run programs such as Medicaid. Consult a reverse mortgage lender or Medicaid expert for more details.
Calculate how much you qualify for with the Reverse Mortgage Calculator. Eligibility: You must be at least 62 years old to apply.
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