There are many common questions regarding the HECM Reverse Mortgage that I’d like to clear up for our Las Vegas Senior clients.
While an FHA Reverse Mortgage may seem like a complex transaction that only a few seniors can qualify for, it is actually a fairly easy and straight forward process.
1. What is a Reverse Mortgage?
A reverse mortgage is a loan program where a homeowner receives tax free cash from their primary residence based on the borrower’s age and the equity in the property. There are no mortgage payments for life, and the balance does not have to be paid back until the homeowner does not occupy the subject property as the primary residence for a total of 12 months.
2. How do I qualify for a Reverse Mortgage?
The youngest borrower has to be at least 62 years old, and the property has to be a primary residence. The amount of cash given to a borrower is determined by the age of the borrower, amount of equity in the home, and interest rate.
3. How do I receive cash from my property through a Reverse Mortgage?
Cash is distributed in three ways – a lump sum, a monthly payment, or a credit line that can be accessed at any time.
4. Do I have to pay anything on my house with a Reverse Mortgage?
Homeowners Insurance and Property Taxes are required to be paid on time by the borrower. Obviously, any association fees would be the responsibility of the borrower as well.
5. What can I spend the cash on that I receive from a Reverse Mortgage?
Anything you want.
6. Does the government own my home when I die?
No, the homeowner’s heirs or the estate have the ability to sell the home and pay off the remaining mortgage balance. If by chance the mortgage is more than the home is worth, then the FHA insures the difference and there is no additional money required to be paid. This is similar to a standard forward mortgage loan, and the government does not own the home at any time.
7. When does a Reverse Mortgage get paid?
A Reverse Mortgage is a loan against your property that is not required to be paid back as long as you live there as your primary residence. The loan is repaid from the borrower’s estate or the eventual sale of the home when the last surviving borrower no longer lives in the home.
8. How can I lose my home?
The bank never takes over the deed unless there is a default on the taxes and property insurance or the borrower doesn’t live int he property for an entire year.
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Top 5 Las Vegas Mortgage Links / Articles / Questions
- Las Vegas First-Time Home Buyer Frequently Asked Questions
- Las Vegas Mortgage – How Much Can I Borrow?
- What Are The Current Mortgage Interest Rates?
- Applying For A Las Vegas Mortgage – What Documentation Do I Need?
- How Does The Mortgage Approval and Funding Process Work?
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Raintree Mortgage (Las Vegas)
9488 West Flamingo Rd. Suite 102
Las Vegas, NV 89147 | NV LIC 2511
702-432-5626 | Email
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{ 2 comments… read them below or add one }
I’m curious whether these 62-and-over home owners who took out reverse mortgages are defaulting at the same rate as other borrowers who have more conventional loans. Also, you mention that FHA insures against the drop in home value, but does the lender stop paying out equity on the reverse mortgage if average home prices drop substantially?
That’s a good question. I’d probably guess that there is a lower rate of default due to the fact that the only things reverse mortgage borrowers have to worry about are annual taxes, home owners insurance and HOA dues.