OK, What is a Reverse Morgage?

• Definition: A Reverse Mortgage is a unique financial tool that enables homeowners ages 62 and over to tap into their home's equity, receiving either a monthly income, lump sum of cash or a line of credit. There are minimal income and credit qualifications. There is no repayment until the homeowner(s) permanently leave the home. You retain full ownership of the property.
  
  Qualifications: Applicant(s) must be at least 62 years of age. In many cases, you may be able to payoff existing liens or mortgages with the Reverse Mortgage, which eliminates your monthly loan payments. You must also live in your home as your primary residence. Manufactured homes have specific requirements that must be met in order to be eligible for Reverse Mortgages. Please contact us for a list of these requirements.
  
  Taxes and Insurance: You cannot lose your home under normal circumstances, but please understand foreclosure may occur if you do not pay your taxes and insurance and otherwise comply with the loan terms.
  
  Determination of Loan Amount: The loan amount is based on the home's value, the age of the youngest homeowner, the current interest rate and the lessor of the appraised value or maximum allowable lending limit.
  
  Counseling: For your protection, all borrowers are required to receive counseling from a third party counseling agency prior to applying for a reverse mortgage. We have a list of counselors in your area. In most instances, counseling may be completed by telephone. See What is Counseling? for more information.
  
  Payment Plans: You can choose from several payment plan options:
  

• Tenure: You receive a monthly check for as long as you live in the home.
• Line of Credit: You can draw up to a maximum amount at the times and in the amounts of your choosing.
• Lump Sum Cash Advance: A lump sum of cash distributed to you at closing.
• Term: You receive a defined amount each month for a specified term. This is useful if you want or need more cash each month and/or do not expect to remain in your home for the rest of your life. When the defined term is up, payments will stop however the loan is still not due until you cease to occupy the home as your primary residence.
• Modified: You may opt to receive funds in a combination of the above options.
  

Processing Time: On average, it may require 4-8 weeks to process and close a Reverse Mortgage. This may even require more time in cases where the home is in need of repairs required to be acceptable for the program.

Closing Costs: Most closing costs are financed into the loan. We can tell you how charges for your appraisal, title insurance, origination fee and recording fees are handled. We will be happy to provide you with a Fee Worksheet of Closing Costs from information provided by filling out the "Contact Us" form, via telephone or face-to-face meeting. Note: if closing costs are financed it will reduce the amount of available loan proceeds.

Interest Rate: The interest rate charged varies depending on the Reverse Mortgage program selected by you. All programs offer adjustable or fixed rates. The adjustable rate loans have lifetime caps on the maximum allowable rate. The rates and costs are regulated by FHA and the Private Investor in the case of higher valued properties. We will be happy to provide you with a quote using the current rates.

Impact on Income Taxes and Social Security: Proceeds from a Reverse Mortgage are considered to be proceeds from a mortgage loan and not considered income. Therefore, the funds received are not subject to income tax and do not affect Social Security Benefits. Borrowers receiving Medicaid or SSI may not be affected if the funds from the Reverse Mortgage are spent in the month received. As always, we recommend that you consult with your tax advisor for further details and advice.

Repayment: The Reverse Mortgage does not have to be repaid as long as the homeowner owns and maintains the home as their primary residence and does not permanently leave the home (it is important to note that the homeowner must pay the taxes and insurance). The Reverse Mortgage can be repaid either from the proceeds of the sale of the property or other liquid assets, or in the event of death the heirs can obtain a conventional mortgage to pay off the reverse mortgage. The loan balance consists of the financed closing costs, the cash that was advanced to the borrower and any interest and mortgage insurance servicing fees that accrued. Remaining equity belongs to you or your heirs. The Reverse Mortgage is subject to a non-recourse limit, which states that you or your heirs are only required to repay the loan balance or the fair market value of the home, whichever is less. Should you outlive the lender's estimate and have the principal go to zero, the home is yours until you choose to leave it.

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