Reverse Mortgage FAQs.  Frequently Asked Questions

Yes, a HECM Reverse Mortgage is a lien just like regular mortgages.

The equity is all yours after paying off the HECM mortgage.

The loan continues as long as it is a primary residence. The remaining spouse, whether younger or older, can stay in the house for life and never have a mortgage payment. This gives lifetime security to the remaining spouse.

Your heirs have up to a year to sell the house and keep all the equity after paying off the loan. They can also pay off the HECM and keep the house themselves.

The HECM mortgage is FHA insured. If there is a loss on the sale FHA takes the loss. You cannot lose on a HECM.

No. The mortgage is a distribution of your equity. It is not income.

No. It doesn’t affect any retirement plan, Medicare, or Medicaid.

Yes, the Line of Credit (LOC) earns interest. The interest earnings also compound. This is a wonderful feature of HECM Reverse Mortgages. The LOC earnings can be used without touching the principal. There is no cost to the LOC until it is used.

Several reasons: First of all, a HELOC requires a monthly   payment. The HECM doesn’t. There is no growth, and if times are bad such as ’07 and ’08, banks froze their HELOCs so you couldn’t draw any more funds, and in some cases they called the loans demanding a payoff within 30 days.

Yes. By putting down a percentage of the purchase price (usually between 50 and 60 percent) you will never have a mortgage payment.

A HECM is an excellent tool to use for selling a current home, using the proceeds to move into a smaller home. By putting down a percentage of the purchase price (usually between 50 and 60 percent), you can have a HECM mortgage with no mortgage payments.

It is primarily based on two factors: the value of the home and the age of the youngest borrower. The older you are, the more equity you quality for.

No. It is not true that when the husband passes away, his widow will have to move out of our home. HECMs have been revised so that the mortgage is always done on the youngest borrower. No matter which spouse passes first, the mortgage continues.

HECMs are FHA-insured. They are totally secure. Once funded, your mortgage is guaranteed.

Calculating your benefit is very simple. Given the age of the youngest spouse, the approximate value of the home, and any mortgage payoff, I can quickly give you an estimate of the benefit to you.

First of all, I am probably less expensive. All that TV advertising costs a lot of money! Secondly, because I am a small, local company, if you need any questions answered, I am a direct local phone call and I can help you right away. When you call that 800 number you saw on TV, it’s frustrating, because you have to keep pressing 1 through 5 prompts until you get a live person—who is always going to be different and may or may not give you the right answers.

A HECM puts your equity to work for you. The available portion of your equity is converted to a line of credit (LOC) can be spent with no restriction for whatever purpose makes your life better or easier. The LOC also earns substantial interest. That interest can be spent without touching the principle. A very common use is paying for additional household or in-home nursing help to help you age-in-place rather than having to go to assisted living.

No. Just be over 62 and own a home, or want to buy one.

The costs categories are the same as you would see for a traditional mortgage with the exception of an FHA mortgage insurance premium that is charged on all FHA loans.