Reverse mortgages are a safe and secure financial tool, but there are a number of misconceptions. Let’s go over some common questions and concerns so you can understand the facts.
DOES THE BANK OWN MY HOME?
You remain the owner of your home and can stay as long as long as you wish. As the homeowner, you must continue to pay your homeowners insurance, property taxes, and keep up basic home maintenance during the loan period – that’s it. When the home is sold, the loan is repaid (including accrued interest and any fees) and any remaining equity goes to you or your heirs.
HOW MUCH CAN I BORROW?
Three factors are considered to calculate how much equity you can access:
1. Age of the youngest borrower
2. Home Value
3. Current interest rates
Although we use the home value you initially provide to calculate the preliminary loan amount, an independent appraisal must be obtained to determine the current market value of your home. We then re-calculate the loan amount based on this official home value
WHAT IF I HAVE A MORTGAGE ALREADY?
This is perfectly fine. If you qualify, a reverse mortgage will first pay off your existing mortgage and then give you the remaining proceeds. In fact, many of our borrowers use a reverse mortgage for this exact purpose – to eliminate the monthly payments on their existing mortgage.
WILL MY CHILDREN LOSE THEIR INHERITANCE?
The loan is repaid once the last remaining borrower moves out of the home. Normally, the home is sold, the loan is repaid, and any remaining equity goes to you or your heirs. If your children choose to keep the home, they can pay the loan back, perhaps by refinancing the reverse mortgage.
DOES A REVERSE MORTGAGE REQUIRE THAT I MAKE MONTHLY PAYMENTS?
No, there are NEVER any monthly mortgage payments for as long as you occupy the property. Payment of taxes, insurance and upkeep are the responsibilities of the homeowner. Repayment is deferred until the borrower dies, sells the home, moves out of the house, or defaults on any other obligations such as insurance or taxes.