Consult your tax advisor. Consult appropriate Government Agencies. CA Department of Real Estate Broker License 00350120
Q. WHAT IS A REVERSE MORTGAGE?
A. A reverse mortgage is a loan that enables senior homeowners, age
62 and older, to convert part of their home equity into tax-free*
income—without having to sell their home, give up title to it, or make
monthly mortgage payments. The loan only becomes due when the last
borrower (s) permanently leaves the home.
Q: WHAT IS A HOME EQUITY CONVERSION MORTGAGE
(HECM)?
A: A HECM s a government sponsored and guaranteed program that
allows a homeowner to convert the equity in their homes into tax free*
cash.
Q: HOW DO I QUALIFY ?
A: You must be at least 62 years old and own your own home. You
must occupy your home as your primary residence and have a
minimum of 50% equity in your home.
Q: WHO HOLDS TITLE ON THE HOME?
A: You remain on title. Title does not get transferred into the bank’s
name. You own your own home.
Q: IS THE MONEY I RECEIVE TAXABLE?
A: No, it is not, but you should consult your tax advisor.
Q: DOES A HECM EFFFECT MY SOCIAL SECURITY—MEDICARE?
A: No, but it may effect means-tested programs. Ask these agencies for
more information.
A. A reverse mortgage is a loan that enables senior homeowners, age
62 and older, to convert part of their home equity into tax-free*
income—without having to sell their home, give up title to it, or make
monthly mortgage payments. The loan only becomes due when the last
borrower (s) permanently leaves the home.
Q: WHAT IS A HOME EQUITY CONVERSION MORTGAGE
(HECM)?
A: A HECM s a government sponsored and guaranteed program that
allows a homeowner to convert the equity in their homes into tax free*
cash.
Q: HOW DO I QUALIFY ?
A: You must be at least 62 years old and own your own home. You
must occupy your home as your primary residence and have a
minimum of 50% equity in your home.
Q: WHO HOLDS TITLE ON THE HOME?
A: You remain on title. Title does not get transferred into the bank’s
name. You own your own home.
Q: IS THE MONEY I RECEIVE TAXABLE?
A: No, it is not, but you should consult your tax advisor.
Q: DOES A HECM EFFFECT MY SOCIAL SECURITY—MEDICARE?
A: No, but it may effect means-tested programs. Ask these agencies for
more information.
 | |  | |  | |  | |  | |  | |  | |  |
| Reverse Mortgage FAQ's |
Q: HOW MUCH MONEY CAN I GET?
A. The amount you can borrow depends on several factors, including your age, the type of reverse mortgage you select, current
interest rates, the location of your home, the appraised value of your home and FHA's lending limits for your area. In most cases,
the older you are, the more valuable your home, and the less you owe on it, the more money you can get. How much depends on
the value and location of your home as well as your age.
Q: HOW DO I RECEIVE MY MONEY?
A: There are several different options to choose from. One full cash payment, monthly payments, in a line of credit or a
combination of these three options.
Q: HOW CAN I USE MY MONEY?
A: You can use your money however you like. Homeowners have used their money for vacations, home modifications, healthcare,
education for grandchildren and to supplement income.
Q: WHEN DO I HAVE TO PAY OFF MY HECM?
A: The loan will become due when one of the following conditions occur:
If you move out of the home for more than 12 months, move permanently or sell.
If you do not pay the property taxes or hazard insurance
If you allow the home to seriously deteriorate.
If you pass away. At that time your heirs will have the option of selling the home, paying
off the loan or refinancing the home into their name.
If you wish to pay off the HECM, you can do it at any time without a prepayment penalty.
Q: WHAT IF THE BALANCE BECOMES GREATER THAN THE VALUE OF MY HOME?
A: The HECM guarantees that you cannot outlive your equity. You will never owe more than the value of your home. HUD insures
the shortage if any.
Q: IS IT REQUIRED THAT I RECEIVE COUNSELING FOR A HECM?
A: Yes. To be eligible fro a reverse mortgage of any type you must attend, either in person or by phone, a 2 hour counseling session
with a HUD approved independent counselor. This counseling is required to protect the borrower from receiving incorrect
information about reverse mortgages. You will receive a counseling certificate that must be given to the lender before the close of
the loan.
Q. I STILL OWE MONEY ON MY FIRST MORTGAGE. CAN I STILL GET A REVERSE MORTGAGE?
A. Yes. You may be eligible for a reverse mortgage even if you still owe money on a first or second mortgage. The funds you would
receive in the reverse mortgage would be used to pay off whatever existing mortgages you have on the property.
Q. WHAT ARE THE TAX CONSEQUENCES OF A REVERSE MORTGAGE? WHAT ABOUT MY SOCIAL SECURITY AND
MEDICARE BENEFITS?
A. Because reverse mortgages are considered loan advances and not income, the IRS considers them to be not taxable. Similarly,
having a reverse mortgage should not affect your Social Security or Medicare benefits.
If you receive SSI, Medicaid, or other public assistance, your reverse mortgage loan advances are only counted as "liquid assets" if
you keep them in an account past the end of the calendar month in which you receive them. You must be careful not to let your
total liquid assets become greater than these programs allow. It may be wise to consult your tax advisor on this.
Another tax fact to bear in mind: interest on reverse mortgages is not deductible on your income tax returns until the loan is paid
off entirely.
Q. WHAT IF WE WANT TO LEAVE OUR HOME TO OUR KIDS?
A. It’s your home. You can still leave it to your children, or to anyone you choose.
Q. MUST MY HEIR OR LAST SURVIVING BORROWER SELL THE PROPERTY TO REPAY THE REVERSE MORTGAGE LOAN?
A. No. Repayment may be accomplished by refinancing the reverse mortgage with a traditional "forward" mortgage loan, or
through the use of other assets.
Q. CAN I REFINANCE A REVERSE MORTGAGE, AS I WOULD BE ABLE TO DO WITH A TRADITIONAL HOME MORTGAGE?
A. Yes. Refinancing can make sense if your home increases in value or interest rates drop.
*As always, please consult a tax advisor.
A. The amount you can borrow depends on several factors, including your age, the type of reverse mortgage you select, current
interest rates, the location of your home, the appraised value of your home and FHA's lending limits for your area. In most cases,
the older you are, the more valuable your home, and the less you owe on it, the more money you can get. How much depends on
the value and location of your home as well as your age.
Q: HOW DO I RECEIVE MY MONEY?
A: There are several different options to choose from. One full cash payment, monthly payments, in a line of credit or a
combination of these three options.
Q: HOW CAN I USE MY MONEY?
A: You can use your money however you like. Homeowners have used their money for vacations, home modifications, healthcare,
education for grandchildren and to supplement income.
Q: WHEN DO I HAVE TO PAY OFF MY HECM?
A: The loan will become due when one of the following conditions occur:
If you move out of the home for more than 12 months, move permanently or sell.
If you do not pay the property taxes or hazard insurance
If you allow the home to seriously deteriorate.
If you pass away. At that time your heirs will have the option of selling the home, paying
off the loan or refinancing the home into their name.
If you wish to pay off the HECM, you can do it at any time without a prepayment penalty.
Q: WHAT IF THE BALANCE BECOMES GREATER THAN THE VALUE OF MY HOME?
A: The HECM guarantees that you cannot outlive your equity. You will never owe more than the value of your home. HUD insures
the shortage if any.
Q: IS IT REQUIRED THAT I RECEIVE COUNSELING FOR A HECM?
A: Yes. To be eligible fro a reverse mortgage of any type you must attend, either in person or by phone, a 2 hour counseling session
with a HUD approved independent counselor. This counseling is required to protect the borrower from receiving incorrect
information about reverse mortgages. You will receive a counseling certificate that must be given to the lender before the close of
the loan.
Q. I STILL OWE MONEY ON MY FIRST MORTGAGE. CAN I STILL GET A REVERSE MORTGAGE?
A. Yes. You may be eligible for a reverse mortgage even if you still owe money on a first or second mortgage. The funds you would
receive in the reverse mortgage would be used to pay off whatever existing mortgages you have on the property.
Q. WHAT ARE THE TAX CONSEQUENCES OF A REVERSE MORTGAGE? WHAT ABOUT MY SOCIAL SECURITY AND
MEDICARE BENEFITS?
A. Because reverse mortgages are considered loan advances and not income, the IRS considers them to be not taxable. Similarly,
having a reverse mortgage should not affect your Social Security or Medicare benefits.
If you receive SSI, Medicaid, or other public assistance, your reverse mortgage loan advances are only counted as "liquid assets" if
you keep them in an account past the end of the calendar month in which you receive them. You must be careful not to let your
total liquid assets become greater than these programs allow. It may be wise to consult your tax advisor on this.
Another tax fact to bear in mind: interest on reverse mortgages is not deductible on your income tax returns until the loan is paid
off entirely.
Q. WHAT IF WE WANT TO LEAVE OUR HOME TO OUR KIDS?
A. It’s your home. You can still leave it to your children, or to anyone you choose.
Q. MUST MY HEIR OR LAST SURVIVING BORROWER SELL THE PROPERTY TO REPAY THE REVERSE MORTGAGE LOAN?
A. No. Repayment may be accomplished by refinancing the reverse mortgage with a traditional "forward" mortgage loan, or
through the use of other assets.
Q. CAN I REFINANCE A REVERSE MORTGAGE, AS I WOULD BE ABLE TO DO WITH A TRADITIONAL HOME MORTGAGE?
A. Yes. Refinancing can make sense if your home increases in value or interest rates drop.
*As always, please consult a tax advisor.
© 2007 Capital Reverse Mortgage Group, Inc
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