Important Reverse Mortgage Facts
A Retirement Solution for Those Needing Monthly Income:
Those who learn about a reverse mortgage want to know everything about the FHA program before they make the decision to sign off on a reverse mortgage loan. So, we decided to give you the most important Reverse Mortgage facts:
1. What type of homes are eligible?
Single family residences, HUD approved condominium projects, 2-4 unit dwellings where the owner lives in one of the units and manufactured homes that meet the FHA requirements are also eligible.
2. What is the difference between a reverse mortgage and an equity line of credit?
With a 2nd trust deed mortgage or home equity line of credit, the borrower’s must have adequate income to support the monthly payment they make. They pay principle and interest on the equity line of credit loan until it’s paid off. They can draw up and down on the line of credit till it’s call date, than they have to pay off the total remaining balance. A REVERSE mortgage is different, because it pays you. There are no monthly principle and interest payments. With a reverse mortgage, you are required to pay real estate taxes, utilities and hazard and flood insurance premiums.
3. Will we have an estate we can leave to our heirs?
When the home is sold as a primary residence, the cash, interest and other HECM finance charges must be repaid. Any proceeds above those costs will remain and belong to your spouse or your heirs. This means that the remaining equity can be transferred to your heirs. No debt is passed along to the estate or heirs.
4. How do I receive my monthly Reverse mortgage loan payments to me?
There are 5 different payment plans to choose from. You can select from the following:
- (a) Tenure – equal monthly payments as long as least one borrower lives and continues to occupy the property as a principle residence.
- (b) Term – equal monthly payments for a fixed period of months selected.
- (c) Line of Credit – unscheduled payments or instal
lments at times and in the amount of your choosing until the line of credit is exhausted.
- (d) Modified Tenure – a combination of a line of credit and a scheduled monthly payments for as long as you remain in the home.
- (e) Modified Term – combination of a line of credit plus monthly payments for a fixed period of months selected by the borrower.