Reverse Mortgage FAQs
Does the reverse mortgage lender take my house, or am I selling my house?
No. Borrowers maintain the title to their house, and they still own and live in their homes. A reverse mortgage doesn’t sell the home to the bank. It’s simply a loan that doesn’t require monthly payments.
What happens if I need to move out of my house for medical reasons?
Reverse mortgage borrowers are allowed to temporarily leave their house for up to 12 consecutive months, for medical reasons. After this period of time, the borrower must return to the home and live in it as their primary residence, or the loan becomes due. The borrower could refinance, pay off the loan, or sell to pay off the mortgage balance (the borrower would still keep the equity).
How would I receive loan payments from my reverse mortgage?
In one of a number of ways. You can receive monthly payments for life (tenure payments) or you can specify how much you want to receive and we can see how long it will last for (term payments). Or you can receive some of the money in a lump sum or leave it in a credit line and receive the rest in monthly payments for life or a specified term. The program is flexible and the choice is yours. The best part is you can change the way you elect to receive the funds. In other words, you can change the way you receive reverse mortgage proceeds if your needs or desires change in the future. You may start with a credit line and “turn on” monthly payments in the future if you desire a secure stream of income.
What are the differences between a fixed rate and adjustable reverse mortgage loan?
Adjustable rate reverse mortgages give seniors the most flexibility in loan payment options and can often unlock more equity than fixed rate mortgages. While fixed-rate reverse mortgages offer the benefit of locked rates, they only allow borrowers to access their loan in one lump sum, up-front payment. Because HECM guidelines mandate only 60% of a borrower’s available credit line can be accessed from their reverse mortgage in the first year, fixed-rate mortgages also limit the amount homeowners can borrow. No payments are made in the second year from a fixed rate HECM. Only with the adjustable rate HECM can you receive any proceeds in year 2.
Is Trinity Reverse Mortgage a mortgage lender?
No. We are a reverse mortgage broker, and we have a large number of HUD-approved lenders with whom we work. As a broker of mortgages, there are a number of products we can offer that can help you close gaps and find financial solutions where individual reverse mortgage lenders couldn’t. Lenders are limited to the products they offer; we have access to all the Lenders products. For example, some Lenders do not offer Jumbo’s, or an annually adjustable HECM.
Will the bank get my house when I pass away?
No. Your heirs will inherit the right to purchase or sell your house when the last person on the property title passes away. The new owners (Heirs) will have up to 12 months to decide what they would like to do with the property. They may pay off the mortgage balance with cash, or through a refinance. If they don’t want to keep the house, they may sell the property and keep any equity that is left over after paying off the reverse mortgage loan.
Do I still qualify for a reverse mortgage if my children are on the title?
You may. You will still qualify for a reverse mortgage as long as your children are 62 years or older. Or if your children are less than 62, they will have to come off the title at the close of escrow. The property can be passed to them via a trust or a will.
Can my heirs or I owe more than the value of the home?
No. FHA insured reverse mortgages, or HECM loans, are non-recourse loans. That means borrowers cannot owe more than the value of the home. If, in the unlikely case that the reverse mortgage balance exceeds the property value, FHA mortgage insurance covers the lender. The maximum a borrower can owe if they sold the house is 95% of the value of the home.
Can I still get a reverse mortgage if my spouse is permanently in a nursing home?
Yes. You are still eligible for a reverse mortgage as long as one borrower occupies the house as their primary residence.
Do I still qualify if the property is in a trust?
In most cases, yes. You would qualify as long as the property is not in an irrevocable trust. If you do have in irrevocable trust, it is possible, if all parties agree, to modify the trust to a Revocable Trust and then proceed with the Reverse Mortgage.
When can I sell the house or pay off my reverse mortgage?
Anytime. There is no penalty on the loan for early repayment. Simply pay off the mortgage balance, and the remaining equity is yours.
Can I make payments to pay off my loan balance or keep it the same?
Yes. You can pay off as little or as much of the loan balance at any point in time. If I still have a loan balance on my house, can I still qualify?
If I still have a loan balance on my house, can I still qualify?
Yes. Proceeds from the reverse mortgage would be used to pay off any mortgages or liens on the title.
Does the age of the reverse mortgage borrower affect the amount of the available loan?
Yes. The amount that is loaned to a person age 62 is 52.4% of the potential gross benefit with any closing costs considered. And every year after that slightly increases to a max of 75%. For example, at age 63 the percentage goes up to 53.0%. The older you are, the more credit you can access.
Can I use a reverse mortgage to purchase a home?
Yes. A reverse mortgage for purchase – also a HUD-approved HECM loan – allows people over 62 to purchase a new primary residence with a reverse mortgage. Simply provide a down payment, and the reverse mortgage covers the rest. This can be a great solution for downsizing and can provide even more income than a reverse mortgage on your current home.
After a reverse mortgage, do I still own my home?
Yes. Reverse mortgage borrowers retain the title to their homes. A Reverse Mortgage is just another type of mortgage, it is still a lien on your property. You still remain on the title as the owner.
Do my heirs have to pay off my reverse mortgage loan out of their own pockets?
No. Your heirs can refinance the loan balance with a traditional loan with no out of pocket costs, or they may sell the home and keep the equity. Your heirs would never have to come up with “out of pocket” money to pay the loan balance, which is federally insured. If the balance exceeded the value of the home, the FHA mortgage insurance would “kick in” and pay the difference.
Do I still have to pay the property taxes and insurance?
Yes. Homeowners are required to pay the property taxes and maintain homeowners insurance.
Can I refinance to receive my reverse mortgage for more money if home values go up?
Yes. People can often refinance their reverse mortgages to receive more money if home values or lending limits increase.
Are there any restrictions on how I can spend my loan proceeds?
No. You can use your reverse mortgage income for anything you want. Many seniors use their reverse mortgage income to pay for in-home care, bills or debt, traveling and family vacations, new cars, home improvements, assisting family members or generally enjoying a higher quality of life.
Is there a term limit on the loan? What if I live for several decades more?
No, the loan terms are the same for as long as you live in your home. The FHA Reverse Mortgage program is set up to allow the borrower to remain in their homes regardless of the loan balance. HUD/FHA requires a mortgage insurance payment up front to hedge lenders’ risk, but in the end, it is their risk, not yours or your beneficiaries.
Who can tell me more about getting a reverse mortgage?
Our team of reverse mortgage experts can be reached at 925-433-2470. We’re here to educate you, and to help you explore your options so you can make an informed decision about your financial future. Our team can meet with you over the phone, or schedule a free in-home consultation – whichever you prefer.
Will my reverse mortgage payments affect my eligibility for Medicaid?
Distributions from a reverse mortgage can affect your qualification to Medicaid and needs-based benefits. However, proper planning can be done to provide you Reverse Mortgage monthly payments which don’t exceed the monthly maximum allowed in your bank account at the end of the month. This varies from state to state and county to county, depending on your needs based benefit, but it’s an area with which our firm is familiar. We’ve solved exactly this type of problem for our clients many times.
Can I get a reverse mortgage if my spouse is under the age of 62?
The borrower on title must be 62. A non-borrowing spouse can be 18-61 years old. If the borrowing spouse passes away the non-borrowing spouse may live in the house payment free for the rest of their life. If they live in the house for the rest of their lives, the loan becomes due when both pass away.