Today, a Reverse Mortgage is becoming an increasingly popular way for seniors to supplement their retirement, offering a secure option for accessing cash based on the equity in their homes. Here are the answers to common questions you may have about Reverse Mortgages:
What is a Reverse Mortgage?
A Reverse Mortgage is a loan that allows homeowners aged 62 and older to convert a portion of the equity in their home into tax-free cash. HECM Reverse Mortgage loans are insured by the Federal Housing Administration (HUD).
What is the difference between a Reverse Mortgage and a home equity loan?
With a traditional mortgage or home equity line of credit, you must meet minimum income and credit requirements to qualify for the loan, and you have to make monthly loan payments. With a Reverse Mortgage, there are no credit score and generally no income requirements, nor do you make loan payments.
Do I have to repay a Reverse Mortgage loan?
Yes, Eventually. However, your payment is not due on your Reverse Mortgage loan as long as you live in your home, it's your primary residence, you maintain it according to FHA requirements, and you pay required property taxes and insurance.
Do I still own my home with a Reverse Mortgage?
Yes. You keep the title to your home; the lender does not become the title holder. You own and can remain in your home as long as you meet all Reverse Mortgage requirements.
Is any home eligible for a Reverse Mortgage?
Generally, single-family residences, two-to-four-unit owner-occupied dwellings, townhouses, approved condominium units, and some manufactured homes are eligible for a Reverse Mortgage. The home must meet FHA minimum property standards. If home repairs are required, in some cases they can be completed after closing using funds from the Reverse Mortgage.
Does a Reverse Mortgage affect my eligibility for Social Security or Medicare benefits?
A Reverse Mortgage usually does not affect eligibility for Medicare or Social Security benefits. Some government benefits, such as Medicaid and Supplemental Security Income (SSI), may be affected by a Reverse Mortgage. You should consult a qualified professional to determine if there would be any impact to your government benefits.
Are there any income or credit score requirements necessary to qualify?
No. There are no credit score and generally no income requirements.
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