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Frequently Asked Questions

Golden Age Financial Solutions seeks to create and promote financial freedom for the folks who helped build this country into what it is today.

Frequently Asked Questions

What is an FHA Reverse Mortgage?

An FHA reverse mortgage is also commonly known as a Home Equity Conversion Mortgage (HECM). The loan is insured by the Federal Housing Administration.

What are the qualifications for a Reverse Mortgage?

You must be 62 years or older to qualify for a reverse mortgage, own your home and occupy it as your primary residence.

What are the benefits of a Reverse Mortgage?
  • You will not lose Social Security or Medicare benefits.
  • You do not have to make payments on the loan as long as you reside in the home and comply with the loan terms.
  • You have greater financial freedom and control allowing you more security and peace of mind.
  • You can never owe more than the value of your home.
What can I use my Reverse Mortgage funds for?

You have a lot of options for using your funds, the most common uses include:

  • Home repair, improvements and accessible housing accommodations
  • Hire in-home health care services
  • Paying off debts like credit cards and medical bills
  • Increasing monthly cash flow
  • Paying off existing mortgage(s)
  • Payment of monthly medical expenses
  • Traveling
  • Supplementing your retirement income/portfolio
  • Paying homeowners insurance and property taxes
  • Helping family members
  • Having fun and enjoying your golden years
Are there any limitations on what I use the money for?

You can use your funds for whatever you choose, there are no limitations.

Will a Reverse Mortgage affect my Social Security, Medicare or pension benefits?

A Reverse Mortgage is considered loan proceeds and not income, therefore your benefits will not be impacted.

*Consult a Financial Advisor.

Who owns my home?

You still own your home, not the bank. You can still leave your home to your heirs.

How will my loan eventually be repaid?

When the last borrower leaves the home or passes away the Reverse Mortgage loan is repaid. What typically happens is that the home is sold and the proceeds pay back the reverse mortgage loan. After the loan is repaid any remaining equity goes to your heirs. Your heirs have the option of keeping the home and they can pay back the reverse mortgage loan through various options such as a refinance into a Conventional or FHA loan.

How would I receive my funds, and how is the loan length determined?

Your disbursement option determines the length of the loan. The funds from your Reverse Mortgage can be disbursed in several ways:

  • Full or partial lump sum
  • Line of Credit
  • Monthly Payments (tenure or modified tenure plan)
  • Combination of any of those

Your Reverse Mortgage professional can help you decide what disbursement option is most beneficial for your specific situation and needs.

What are my obligations as a borrower?

While in a reverse mortgage, your obligations include:

  • Payment of property taxes
  • Payment of homeowners insurance
  • Basic home upkeep and maintenance
  • Maintain the property as your primary residence
Are Reverse Mortgages only for emergency situations, poor seniors or as a last resort option?

Definitely not! It’s a misconception that many people have. A reverse mortgage can be a smart and powerful financial planning tool. It can be a great resource in terms of supplementing income and managing retirement risks and options. Your reverse mortgage professional should help you customize your reverse mortgage to meet your particular needs.

What if the loan amount ends up exceeding the value of my home? Will my heirs be responsible for my debt?

Reverse Mortgages are non-recourse loans.  Since the loan is insured by the Federal Housing Administration (FHA) if the loan’s balance ends up surpassing the value of the home the FHA insurance covers the difference. Your heirs won’t be responsible for your debt.

What happens if I pass away during my loan before I receive the full amount of my loan?

Any part of your loan that hasn’t yet been sent to you when you pass away remains as equity in the home. Immediately after the last borrower passes or leaves the home the loan becomes due.  However, heirs are given anywhere between 6-12 months (with a possibility of an extension) depending on the loan program to decide what they want to do with the home.

When does my loan become due?

“Maturity events” are instances when a loan becomes due. Maturity events include cases when the last borrower:

  • Does not pay the home’s taxes and insurance
  • No longer occupies the home as the primary and principle residence
  • Sells or transfers the home
  • Passes away
  • Defaults under the terms of the reverse mortgage
  • Leaves the home permanently or for more than 12 consecutive months
Can I change my mind after I close on the loan?

After you have signed your final loan documents you have a “rescission period” which means you have 3 days after closing to cancel if you choose, without paying interest. After the loan has funded if you want to end the reverse mortgage you can pay back the loan amount and any interest accrued.

How are my reverse mortgage fees and interest rate calculated?

Rates and fee calculations are tied to fixed or variable rates as well as an index and margin. Depending on your particular situation your reverse mortgage professional can provide you with exact fees and interest rates.

Can I add my spouse or adult children to the loan?

If your spouse or adult children are over the age of 62 they could be a qualified borrower.

What if my spouse is under 62, can he/she still be added to the loan?

Yes, there is a possibility of adding a spouse under the age of 62. Your reverse mortgage professional can take a look at your situation and see what options are available in your area.

HUD DISCLAIMER

This material is not from HUD or FHA and has not been approved by HUD or a government agency.