#1 What is the FHA 'HECM' (pronounced 'Heck-um') Reverse Mortgage?
This program is a special type of mortgage that enables you, as a senior 62 years or older, to convert a portion of your existing home equity into cash. You can receive a lump sum payment, a monthly income (tenure) a term option (equal monthly payments for a fixed period of time) a line-of-credit or a combination of these choices --- without selling your home, giving up title or making any monthly mortgage payments. The loan does not have to be repaid until you sell, vacate your home or upon your death.



#2 What's the difference between a Reverse Mortgage and a traditional loan?
With a traditional loan or a home equity loan, you must have a good credit rating and sufficient income to qualify for the loan. Monthly mortgage payments are required and if you fail to make payments, you could lose your home. The Reverse Mortgage pays you and no repayment is required as long as your home remains as your primary residence.



#3 Why should I consider a Reverse Mortgage?
If you need additional money for home repairs, to pay off debts or an existing mortgage, supplement your income, medical assistance or even future home care, etc., you may benefit from a Reverse Mortgage. Proceeds will provide you with financial independence and give you peace of mind . There is no reason to be house rich and cash poor, and be hemmed in financially. Your home can be your secondary retirement fund- - - use it to your advantage.



#4 What are the eligibility requirements for a Reverse Mortgage?
You and any co-borrowers (spouse or others) must be at least 62 years old. The house must be owner-occupied and your primary residence. Your home must be free and clear or with an existing mortgage that can be repaid from the proceeds of the new Reverse Mortgage.



#5 What type of property is eligible?
The property can be a single-family residence, a one-to-four unit dwelling with one unit occupied by the borrower, a unit in FHA-approved condominiums or a home in an FHA approved Planned Unit Development (PUD).



#6 What factors determine the amount of money I can receive?
The amount is based on a HUD formula which factors in the appraised value of your home (subject to the maximum allowable FHA limit in your county) the age of the youngest borrower and the current interest rate upon closing. The older you are, the larger your payments are likely to be.



#7 What if my home is worth more than the FHA maximum limit?
If your home exceeds the maximum limit and you desire more cash than is available under the FHA program, the Reverse Mortgage Specialist will explain other options.

#8 Is there a limit on the amount of money I'm eligible to receive?
Yes. Unlike a traditional loan, you will receive less with a Reverse Mortgage. Since the loan amount, accumulative interest, etc., are charged against the home's equity, there must be a sufficient amount of equity in your home to cover the deferred payment to the lender.



#9 What type of payment plans are available?
You can receive all of your proceeds in a lump sum, a monthly income or leave the funds in a line-of-credit and draw from it as needed. The unused credit-line balance appreciates in value for your benefit. You may also choose a combination of these options. Available funds are payable to the last surviving borrower.



#10 What happens if I'm drawing a monthly income and I need additional money for emergencies or for other reasons?
You have the right to convert to a line-of-credit, draw out the needed cash and then change back to the monthly plan. Your monthly proceeds will be less, depending on how much you withdrew from your account.



#11 What if I need a monthly income that is greater than what is being offered under the lifetime income plan?
You can increase your monthly income under the 'term option plan,' which pays you a monthly amount for a set period of time. When the term expires so do your payments, but you will still have the benefit of continuing to live in your home.



#12 Am I charged interest on the entire amount of money I'm eligible to receive?
No. The interest accumulates against funds you actually borrow, which added to your outstanding loan balance. This, in turn, decreases the existing equity in your home. A credit-line balance is not considered borrowed funds.



#13 What is my personal liability or my estate's liability on this type of loan?
The liability is limited to the loan balance or the value of your home upon repayment, whichever is less. Any equity in excess of the outstanding loan balance is yours or it will be payable to your estate. You can never owe more than the property is worth at the time of sale!



#14 What if I have a mortgage or lien against my home?
As long as you have sufficient equity, you can still obtain a Reverse Mortgage. Proceeds must first be used to pay off any existing mortgages or liens. This results in the elimination of your monthly payment and thereby creates spendable dollars for yourself.

#15 Can I pay my outstanding loan balance in full without paying a penalty?
Yes. Your lender will also accept partial payments if you desire to reduce your loan balance.



#16 Is the money that I receive taxable?
No. The IRS treats these funds as borrowed money, which makes them non-taxable.



#17A Am I still eligible to receive proceeds if I'm drawing Social Security or other retirement benefits? 
Loan Proceeds Do not affect Social Security Benefits or other benefits.



#17B What if I'm receiving Social Security Disability (SSI) or Medical benefits?
Benefits and eligibility are not affected since your home is exempt. Proceeds are a loan and not considered an asset. You must follow the guidelines established by states agencies.



#18 Are there any fees or costs in obtaining a Reverse Mortgage?
Yes, just like any other mortgage. All other costs, which include a lender origination fee, normal closing costs (escrow) and the initial FHA Mortgage Insurance Premium (MIP) can be financed.



#19 Can I be forced to sell or vacate my home if the loan amount exceeds the value of my home?
No. The FHA mortgage insurance premium guarantees all payments that you are entitled to receive. You cannot be forced to sell your home and you can continue living there regardless of your outstanding loan balance.



#20 If I'm receiving a monthly payment, will my income stop if the loan amount exceeds the value of my home?
No. If the loan amount exceeds the value of your home, FHA guarantees to pay the difference to the lender. There is no debt passed on to your heirs.

#21 What if at a later time, I decide to sell my house and move?
The Reverse Mortgage becomes due like most mortgages. You will receive any proceeds in excess of the amount owed on the mortgage.



#22A What happens to my home when I eventually pass away?
The accrued interest and any ongoing costs plus what the lender has paid you, or any payment made on your behalf through the years, is due and payable.



#22B who would be responsible for selling the house?
The loan is paid to the lender through the sale or refinancing of the home by your heirs. Any proceeds in excess of the amount owed to the lender belong to your heirs.



#23 What happens if my home appreciates in value during the mortgage term?
You or your heirs are legally required to pay back to the lender only the outstanding balance that is due. Any money remaining after the mortgage is paid, regardless of the home value, goes to you or to your heirs upon your death.



#24 Do I have to transfer ownership to the Lender or to FHA?
No. The title and rights of ownership do not change.



#25 What are my obligations as a borrower?
You must keep your home as your primary residence, maintain your home in good condition, pay the property taxes and insurance, and homeowner's association dues if any.



#26 Am I still eligible for a Reverse Mortgage if my home is in a Living Trust?
Yes. However, your Trust is subject to review and approval by an attorney. An Amendment to the trust is also required and it's prepared and included in the closing loan package.