Reverse Mortgage FAQs

Answers to Common Reverse Mortgage Questions

Q. Do I have to be a certain age to be eligible for a reverse mortgage?
A. Yes. All parties on title must be at least 62 years old. The mortgage is based upon the youngest borrower's age.

Q. Will I still retain title (ownership) to my home?
A. Yes. You retain title to your home during the period when you have a reverse mortgage, just as you would with a traditional home mortgage.

Q. What types of homes are eligible?
A. Eligible homes include:

• Single-family homes
• 1-4 unit properties
• Some manufactured homes
• Approved condominiums
• Townhomes
• Planned Unit Development
• Newly constructed properties (Certificate of Occupancy must be issued prior to 1009 application date)

Property eligibility may vary based on the reverse mortgage product you choose. Contact a Reverse Mortgage Consultant at 1.800.501.1855 for complete details.

Q. What are my payout options?
A. Depending on the product you choose, you can receive a lump sum, monthly payments, access to cash in the form of a line of credit, or a combination.

Q. What are the fees or costs involved?
A. There are reverse mortgage fees and costs associated with the set up, however, these are typically paid using the loan proceeds at closing.

Q. How will an adjustable rate affect my monthly payments?
A. Your monthly payment will be determined at closing, and an adjusting rate will not affect how much you receive each month.

Q. Will the reverse mortgage affect my Social Security benefits?
A. Your Social Security benefits are generally not affected. However, you should always consult your attorney or accountant before deciding on a reverse mortgage.

Q. What about Supplemental Security Income and state benefits such as Medicaid?
A. Reverse mortgage proceeds are counted as "liquid assets" (for example, money you have in savings and checking accounts) You could lose your eligibility for programs such as SSI and Medicaid if your total liquid assets are greater than these programs allow. We always recommend you consult the administrator of these plans, an attorney, and/or an accountant before deciding on a reverse mortgage.

Q. Do I still pay property taxes and insurance?
A. Yes! You are responsible for and must continue to pay property taxes and homeowners insurance.

Q. How do I receive my payments?
A. You can receive your payments via monthly check, or by automatic deposit into the account you choose.

Q. Who services and sends my payments?
A. Generation Mortgage Company services all of its loans and sends out your payments.

Q. Who arranges for the appraisal?
A. We will arrange for you to meet with an FHA-approved appraiser. Upon request, a copy of the appraisal will be included in your closing documents.

Q. What happens to my spouse if I pass away first?
A. If your spouse is a co-borrower of the loan, he or she can continue to live in the home and continue to receive the existing benefits as long as the home is maintained and taxes and insurance are paid. Repayment would not be required at that time, unless your spouse is not a co-borrower on the loan, or until your spouse passes away or decides to move, at which time the loan balance would be due.

Q. What if I decide to sell my home?
A. As with a traditional mortgage, if you choose to sell your home, the outstanding loan balance becomes due and payable. You or your estate will receive any proceeds exceeding the loan balance.

Q. If my home appreciates during the mortgage term, who will be entitled to that money?
A. Any money remaining after the mortgage is paid in full goes to you or, upon your death, to your heirs.

Q. Can I be forced to sell or vacate my home if the money I owe on the loan exceeds the value of my home?
A. No. As long as you continue to occupy the property as your principle residence, maintain your home, and continue to pay your taxes and insurance, you will not be forced to sell or vacate your home - even if the total of the mortgage payments made to you, plus interest, exceed the value of the property. The required Mortgage Insurance Protection (MIP) premium and monthly set aside protects you should your property value experience a decline.

Q. What if I move out temporarily, will the loan become due?
A. FHA's policy states that if a borrower remains out of the home for 12 consecutive months, the loan would become due.

Q. When is the loan due?
A. When none of the borrowers remain in the home, the loan becomes due. However, you may choose to pay off the loan at any time. As with any other loan tied to the property, the family or heirs can sell or refinance the home and pay off the loan.

Note: There are default measures that would require your loan to become due. This information is clearly set forth in the loan documents you receive should you decide on a reverse mortgage.

Q. How much will I owe at the end of my loan?
A. All the money borrowed, including any money used to pay the loan’s closing costs, all accrued interest, financial and service fees and MIP required for HECM loans.

Q. What if I owe more money than the home is worth?
A. The HECM reverse mortgage is a "non-recourse loan". This means that the HECM borrower (or his or her estate) will never owe more than the loan balance or value of the property, whichever is less, and no assets other than the home will be used to repay the debt. This applies only when the borrower or estate chooses to sell the property to pay off the reverse mortgage loan. If the borrower or estate wishes to retain the property, the balance must be paid in full. If there is money left after the existing loan is paid, the borrower or their estate receive the money.

Q. Will I still have an estate that I can leave to my heirs?
A. When you sell your home or no longer use it for your primary residence, you or your estate will repay the loan amount you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs.

Q. How long do the heirs have to sell the property?
A. As long as the heirs are marketing the property in good faith, the servicer will allow several three-month periods—up to one year.

If you have additional reverse mortgage questions, contact a Reverse Mortgage Consultant at 1.800.501.1855 to find out if a reverse mortgage is right for you.