Reverse Mortgage Common Questions & Answers

Q. I currently have a loan on my home. Do I still qualify for a Reverse
Mortgage?

A. Yes, but the existing loan must be paid off prior to, or at, the settlement of the Reverse
Mortgage. Quite often the Reverse Mortgage is used to refinance an existing loan.

Q. My property is held in a Living Trust. Do I qualify?

A. Yes, as long as you are the primary trustee and are qualified by age.

Q. To avoid probate, my children and I own the property in joint tenancy.
Do we still qualify?

A. Yes, if the children are age 62 and older and live in the property. Otherwise, they
would need to be taken off title prior to settlement.

Q. Does the IRS consider the monthly advances from a Reverse Mortgage
as income?

A. No. The cash advances are actually “loan distributions” and are not considered income.
The cash advances are tax‑free* – (*consult your tax advisor).

Q. Are “manufactured homes" eligible?

A. Yes. The home must have been built in 1977 or later, and have a permanent foundation
that is approved by FHA.

Q. My spouse is permanently in a nursing home. Can we participate?

A. Yes. This program only requires that one owner occupies the property as a principal
residence.

Q. Are there restrictions on how I can use the money?

A. No, of course not. After all – it's your money.

Q. Can the lender take my home away if I outlive the loan?

A. No! Nor is the loan due. You do not need to repay the loan as long as you, or one of the borrowers, continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home's value.

Q. Will I still have an estate that I can leave to my heirs?

A. When you sell your home, or no longer use it for your primary residence, you (or your estate) will have to repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or your heirs.

None of your other assets will be affected by HUD's Reverse Mortgage loan. This debt will never be passed along to the estate or heirs. Your heirs will be able to choose whether to keep the house or sell it. If they decide to keep the home, they must pay the balance due on the Reverse Mortgage. Otherwise, they may sell the home and use the proceeds to pay off the remaining mortgage – and keep any excess proceeds from the sale of the house.

Reverse Mortgage Man
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