Frequently Asked Questions
How the Process Works| How You Can Use the Money You Recieve | Consumer Safeguards | Reverse Mortgage Counseling | For the Families of Seniors |For the Advisors of Seniors- What is a reverse mortgage?
- How does a reverse mortgage differ from a home equity loan?
- Does the lender take ownership of my home?
- Is it possible for my loan balance to become greater than the value of my home?
- How will the income from the reverse mortgage affect my taxes, Social Security and Medicare benefits?
- What’s the catch? Why would banks offer such a deal?
- How do I qualify for a reverse mortgage?
- What can I do with the money?
- Is there a choice in how I receive the cash from my reverse mortgage?
- How much money can I receive?
- How is the interest charged on a reverse mortgage?
- What are the costs involved with a reverse mortgage?
- When does the reverse mortgage need to be repaid?
- What is a counseling certificate?
- Why should I choose Residential Reverse as my reverse mortgage company?
1. What is a reverse mortgage?
A reverse mortgage is a loan that enables senior homeowners, age 62 and older, to convert part of their home equity into tax-free income. There are no income or credit qualifications, and there are no monthly payments to make. You still keep title of the home and the loan only becomes due when the last borrower(s) permanently leaves the home. These loans are backed by the U.S Government or major financial institutions. We will help educate you one step at a time.2. How does a reverse mortgage differ from a home equity loan?
Both a reverse mortgage and a home equity loan use the equity you have built up in your home to provide you with readily available cash. The difference is, with a home equity loan you must make monthly payments on the money used. With a reverse mortgage you don’t have to make any monthly payments for as long as you live in the house. There are a few other differences, please inquire with one of our sdvisors for a deeper comparison.3. Does the lender take ownership of my home?
NO. This is a common misconception that stops senior homeowners from taking advantage of reverse mortgages. The fact of the matter is the borrowers retain title to the property just as they would with a forward or traditional first mortgage or equity loan. The homeowners remain responsible for the payment of the property taxes, homeowners insurance and the upkeep of the home. We will give you an indepth explanation of all the pros and cons.4. Is it possible for my loan balance to become greater than the value of my home?
No. You can never owe more than what your home is worth. What’s more, since the reverse mortgage is what is known as a ‘non-recourse’ loan, the lender cannot seek repayment from your income, your other assets, or your estate. In other words, anything owed over and above the value of the home is HUD's responsibility, that is one of the main reasons for your Mortgage Insurance Premium (MIP). Call us for an explanation about you MIP.5. How will the income from the reverse mortgage affect my taxes, Social Security and Medicare benefits?
Proceeds from a reverse mortgage is not taxable. Its your money (equity), not taxable income. Your regular Social Security or Medicare benefits can not be affected. We will hepl you check into different senarios. The impact, if any, on other federal, state or local assistance programs should be discussed with your financial adviser or tax consultant.6. What’s the catch? Why would banks offer such a deal?
There is no catch. The lender makes the loan based on your age, the amount of equity in the home, your location, interest rates, and the type of reverse mortgage you get. The money gets paid back with interest when the last borrower dies, permanently moves out of the house, or sells the house. It is quite often the proceeds from the sale of the house which satisfy the loan obligation. When explained properly a reverse mortgage can be a great tool for retirement, let us help.7. How do I qualify for a reverse mortgage?
There are no income, health or credit qualifications, so a reverse mortgage can be easy to obtain, provided that:1. You are at least 62 years of age or older.
2. Your home is or is to be occupied as your primary residence.
3. You have substantial equity in your home (proceeds of the reverse mortgage can be used to pay off existing liens or mortgages).
Please visit our pre-qualification calculator to see if you qualify. Or call in for a full approval.
8. What can I do with the money?
You can use the money for anything you choose, from daily living expenses, home improvements, healthcare expenses, paying off existing debts, or simply enhancing your retirement years. For many people, the money provides a “financial security blanket,” in case unexpected expenses arise. This product has helped many seniors breathe easier. We can teach you how this will benifit you.9. Is there a choice in how I receive the cash from my reverse mortgage?
With a reverse mortgage, you have five payment plan options to choose from:- Tenure option: Receive equal monthly payments for as long as you occupy your home as your principal residence.
- Line of Credit: Draw cash from your reverse mortgage whenever and in whatever amount you choose, up to the available limit. Only the funds drawn from the line of credit are subject to interest charges - the unused portion of your line of credit is not charged interest.
- Lump Sum Cash Advance: You can receive all of your money in a lump sum upon the closing of your reverse mortgage.
- Modified Tenure: Set aside a portion of the loan proceeds as a line of credit, in addition to monthly payments.
- Term: Receive equal monthly payments for a fixed period of time that you select, for example 5 or 10 years.
10. How much money can I receive?
The amount of money you can receive from a reverse mortgage is determined by your home value, the number and age of the homeowner(s) and the current interest rate. A representative from Residential Reverse Mortgage will assist you in evaluating your options and calculate the maximum amount of money that will be available to you. Click here for Calculator11. How is the interest charged on a reverse mortgage?
The interest on a reverse mortgage is adjustable and is tied to readily available market indexes. There is also a fixed rate available. The initial rate is determined at loan closing and adjusts either monthly or annually. Interest charges do not affect the amount of your monthly payments and you are only charged interest on your loan balance, which consists of the cash you have received, the financed closing costs, and the interest that has accrued. We will give you a comparison showing the different products available so you can look at them side by side.12. What are the costs involved with a reverse mortgage?
As with a regular mortgage loan, there are closing costs involved with a reverse mortgage as well. These fees can be financed into the loan, and typically include the cost of the appraisal, title insurance, loan origination, and escrow and recording fees. A Residential Reverse Mortgage representative will be happy to provide you with a good faith estimate of the cost involved.13. When does the reverse mortgage need to be repaid?
The reverse mortgage becomes due and payable when the borrower(s) permanently leaves the home - whether they move, sell or pass away. Reverse mortgages are typically repaid from the proceeds of the sale of the home, with any remaining equity staying with the homeowner or their heirs. If a spouse passes away, the surviving spouse continues to receive the full benefits of the reverse mortgage, with no repayment until deciding to permanently leave the home.14. What is a counseling certificate?
Before applying for a reverse mortgage you are required to be counseled by an independent reverse mortgage counselor. This counseling session will help you determine whether a reverse mortgage is right for you. The counseling session can be done either in person or on the telephone, and family or trusted friends are encouraged to participate. At the end of the meeting you will receive a Certificate of Borrower Counseling. For more information go to our counseling information page.15. Why should I choose Residential Reverse as my reverse mortgage company?
Our company’s commitment to helping seniors is second to none. Residential Reverse Mortgage loan advisers have gone through extensive training in order to properly review your needs and to provide you with the best options. We are a proud member of the National Reverse Mortgage Lenders Association (NRMLA), and subscribe to the NRMLA Code of Conduct and Best Practices Standards created to protect seniors from predatory lending practices. Our specialists are here to help. Please contact us and one of our representatives will be happy to discuss the program in greater detail. Just give us 1% of your confidence and we will earn the other 99%. Let us go to work for you - we won’t let you down.New Jersey Residential Reverse Mortgage
800-987-7740
800-987-7740
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