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Q. What locations are you licensed in? A. We are licensed Nationwide. Q. How does a Reverse Mortgage differ from a home equity loan? A. While both Reverse Mortgages and
home equity loans enable you to turn the equity in your home into spendable
dollars, there are important differences between the two types of mortgages.
With a home equity loan, you must make regular monthly payments to repay the
loan. These payments begin as soon as the loan is originated. To qualify for
such a loan, you must earn a monthly income great enough to make those
payments. If you fail to make the monthly payments, the mortgage lender can
foreclose on you, and you can be forced to sell your home. In addition, you
may be required to re-qualify for a home equity loan each year. If you do
not re-qualify, the lender may require you to pay the loan in full
immediately. With a Reverse Mortgage, you do not repay the loan as long as
your home remains the principal residence, your income is not considered
when qualifying you for the loan, and there is no requirement that you
re-qualify each year. Q. Who is eligible for a Reverse Mortgage? A. You, and any co-borrowers, must be
at least 62 years old and either own your home free and clear or have an
outstanding mortgage balance that can be paid off at loan closing using the
reverse mortgage loan proceeds or combination of reverse mortgage loan
proceeds and additional borrower funds at closing. Your home most be a
single-family or two- to four-unit dwelling. Condominiums maybe eligible if
they are in FHA-approved developments or can become approved. You also must
agree to accept mortgage counseling from a HUD-approved counseling agency.
Family members also are strongly encouraged to attend these counseling
sessions. Q. What are the minimum and maximum amounts that I can borrow? A. The maximum amount you can borrow
is based on a HUD formula that factors in the age of the youngest borrower,
the interest rate, and the maximum claim amount. The maximum claim amount is
the lesser of the appraised value of your house or the maximum principal
amount for a one family residence that can be insured by FHA in your area.
The maximum mortgage amount insured by FHA varies by geographic area and
changes frequently. Q. What types of payment plans are available with the Reverse Mortgage loan? A. A borrower with a Reverse Mortgage may choose among five payment options: Term, tenure, modified term, modified tenure, and line of credit. Under the Term option, you may receive equal monthly payments for a fixed period of time selected by you. Under the Tenure option, you may receive equal monthly payments for as long as you occupy the home as a principal residence. Under the Line Of Credit option, you may draw up to a maximum amount of cash at times and in the amounts of your choosing, as you occupy the home as a principal residence. Under the Modified Tenure plan allows you to set aside a portion of loan proceeds as a line of credit and receive the rest in the form of equal monthly payments as long as you occupy your home as a principal residence. The Modified Term plan allows you to set aside a portion of loan proceeds as a line of credit and receive the balance as equal monthly payments for a fixed time period as specified by you. If you select either of the term
plans, you can remain in your home after the end of the loan term without
starting repayment. The same is true if you have withdrawn the maximum
amount under a line of credit or tenure payment plan. Remember, repayment of
a Reverse Mortgage does not begin until you no longer occupy your home as
your principal residence. Q. How will the amount of the monthly payment be calculated? A. How much you can receive in monthly
payments on the age of the youngest borrower, the interest rate, the maximum
claim amount, and the length of time that you will be receiving
payments--for a fixed period or for as long as you live in the house. The
older you are the larger your payments are likely to be. A. Reverse Mortgage payments do not affect your Social Security or Medicare benefits because those benefits are not based on the assets of the recipient. However, in the Federal Supplement Security Income Program beneficiaries must keep their liquid resources under certain limits. If you do not spend Reverse Mortgage advances in the month received, then such funds are considered part of your liquid resources and may adversely affect your eligibility for SSI. Therefore, a Reverse Mortgage borrower who also receives SSI should never draw more money than actually need to spend that month. Regulations for state-administrated
programs such as Medicaid, AFDC, Food Stamps, and for state-funded welfare
programs (such as state supplements to SSI) all have different eligibility
requirements. Therefore, we suggest that you consult a benefits specialist
at your local Area Agency on Aging or the local offices for these programs
to determine how Reverse Mortgage payments may affect your particular
situation. Q. Will I have to pay any fees to obtain a Reverse Mortgage? A. Yes, you will have to pay an
origination fee, other closing costs, and a mortgage insurance premium,
which is divided into two parts: an upfront premium of two percent of the
maximum claim amount, and annual, ongoing fee of half percent on your
mortgage balance. You may be able to finance the origination fee, other
closing costs, and the upfront two percent mortgage insurance premium--that
is, these items may be included in your loan balance so you do not have to
pay for them in cash. In addition to the yearly insurance premium, a
servicing fee is charged to your loan balance each month. A. Absolutely not, as long as you
continue to occupy the property as a principal residence. You can not be
forced to sell or vacate the property, even if the total of the mortgage
payments to you plus interest and mortgage insurance premiums exceeds the
value of the property or if the fixed term over which you received your
payments has expired. No deficiency judgment may result from your Reverse
Mortgage loan. FHA insurance covers any further financial obligation to the
lender. Q. Will my Heirs owe anything to the mortgage lender if I die? A. Upon your death, the loan balance,
consisting of payments made to you on your behalf plus accrued interest,
becomes due and payable. Your heirs may repay the loan by selling the home
or by paying off the Reverse Mortgage loan so that they may keep the home.
If the loan exceeds the value of your property, your heirs will owe no more
then the value of the property. FHA insurance will cover any balance due to
the lender. No additional financial claims may be made against your heirs or
estate. Q. If my home appreciates in value during the mortgage term, who will be entitled to that money? A. Under a Reverse Mortgage you are
legally required to pay back to the lender only the outstanding balance. Any
money remaining after the mortgage is paid goes to you or, upon your death,
to your heirs. Q. What if I decide to sell my home? A. If you choose to sell your home,
the outstanding loan balance becomes due and payable to the mortgage lender.
You or your estate will receive any proceeds exceeding the loan balance. Q. Can I sell my home to my children and continue to live in it? A. If you sell your home to your
children or any other individual, the loan balance will be due and payable
at settlement. After the loan is repaid, any arrangements for your continued
occupancy of the property must be made with the new owners. Q. What is Fannie Mae's role in the Reverse Mortgage program? A. Fannie Mae has agreed to purchase
two types of adjustable-rate HECM loans from the lenders who originated
them. One adjustable-rate mortgage (ARM) plan features annual interest rate
adjustments with a two percent cap on the amount that the interest may
change at each adjustment and a five percent cap on increases or decreases
over the life of the loan. The other ARM plan features monthly interest rate
changes and limits interest rate increase to a ten percent over the life of
the loan. |