Page 2 - WSAAG069_Myths & Realities

Am I eligible? As a government-insured loan, there are Is there any risk of losing my home with a HECM?
several important requirements borrowers must meet Not if you fulfill the obligations of the loan, which include
to qualify. paying your property taxes and homeowners insurance
n You must be at least 62 years old and keeping up with basic maintenance and repairs. If
n You must own your home you do not uphold these responsibilities, the loan may
n The home must be your primary residence become due, and the house may be sold to pay off the
loan. If you fulfill these obligations, your loan remains in
What happens if I leave the home before I receive good standing.
the full amount of the loan?
A reverse mortgage is repaid when the last borrower Call today for additional information.
(or the last eligible non-borrowing spouse) leaves the
house or passes away. Typically, the home is sold and the
proceeds from the sale are used to pay back the loan. The
heirs will receive any remaining equity. If your heirs decide
to keep the home, they can pay back the loan in other
ways such as by refinancing into a conventional loan.
If you pass away while you have a reverse mortgage
loan, any funds that have not been accessed remain
as equity in the home. Upon your passing, your heirs will
inherit your house and any equity in the property—just like
any other loan. If the heirs want to keep the property, or
get the equity, they do need to pay off the loan. They could
do this by selling or refinancing the property. Generally, the
heirs have 6 months to pay off the loan and may be able
to get two, 90-day extensions.

How much money can I qualify for? The amount
of money you can receive from a reverse mortgage
depends on four factors:
n Your age
n Your home value (based on an appraisal that will be
part of the loan process) These materials are not from HUD or FHA and were not approved by
n The interest rate of your loan HUD or a government agency.
n Your current mortgage balance (You must use the A reverse mortgage increases the principal mortgage loan amount
proceeds to pay off your existing mortgage.) and decreases home equity (it is a negative amortization loan).
Reverse mortgage loan terms include occupying the home as
your primary residence, maintaining the home, paying property
Reverse mortgage loan funds can be disbursed in a full taxes and homeowners insurance. Although these costs may be
or partial lump sum, as a line of credit, through monthly substantial, the lender does not establish an escrow account for
payments, or as a combination of any of these. these payments. However, a set-aside account can be set up for
taxes and insurance, and in some cases may be required. Not all
interest on a reverse mortgage is tax-deductible and to the
Are there restrictions as to how I use the money extent that it is, such deduction is not available until the loan is
from a HECM? You can use the proceeds of your partially or fully repaid.
reverse mortgage loan for almost anything. Common The lender charges an origination fee, mortgage insurance
uses include: premium (where required by HUD), closing costs and servicing
n Paying off an existing mortgage (a requirement of the fees, rolled into the balance of the loan. The lender charges
interest on the balance, which grows over time. When the last
loan) borrower or eligible non-borrowing spouse dies, sells the home,
n Paying medical bills permanently moves out, or fails to comply with the loan terms,
n Paying off a large bill the loan becomes due and payable (and the property may
n Financing home repairs and renovations become subject to foreclosure). When this happens, some or all
of the equity in the property no longer belongs to the borrowers,
n Paying for in-home care who may need to sell the home or otherwise repay the loan
n Visiting friends and family balance.