Frequently Asked Questions
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The reverse mortgage loan process can seem overwhelming at first glance. Here at Mid-Continent Funding, Inc., we have highlighted many of the popular questions asked about reverse mortgages. We offer you the basic information you need to know to get started.
What is a reverse mortgage?
A reverse mortgage is a unique loan that allows you to convert the built up equity in your home into usable funds. It is only available to homeowners who are at least 62 years of age. A reverse mortgage never requires any monthly mortgage payments as long as you occupy the home as your primary residence and abide by all loan terms, including staying current on your taxes, insurance, and home repairs.
What is a Home Equity Conversion Mortgage?
A Home Equity Conversion Mortgage (HECM) is the type of reverse mortgage that is federally insured. This federal insurance provides protection for you by the Federal Housing Administration. If you choose monthly disbursements or a line of credit from the reverse mortgage, this insurance makes certain that funds are available. In the event that the reverse mortgage balance exceeds the value of the home, the federal insurance will cover the difference between what is owed and the value of the home.
What is a reverse mortgage calculator?
A reverse mortgage calculator is a device that allows you to obtain an estimate of the amount of money you might be able to receive from a reverse mortgage. In addition to these funds, you will never have another monthly mortgage payment with a reverse mortgage. You are, however, required to continue paying the taxes and insurance for your property.
How does a reverse mortgage calculator work?
The reverse mortgage calculator works by calculating a percentage of your home’s value based off of your age and the current interest rate. That percentage of your home can be used to pay off any existing liens and then however you so choose.
Are there restrictions on how the money from a reverse mortgage can be used?
Absolutely not. The proceeds from a reverse mortgage are yours to do with as you please.
Are my government benefits affected by the money I receive from a reverse mortgage?
A reverse mortgage does not affect entitlement benefits like Social Security and Medicare. If you receive other types of state benefits, talk with your case worker to determine if they will be affected.
Can a reverse mortgage calculator determine my eligibility status?
The purpose of a reverse mortgage calculator is to give you an idea of how much money you could receive from a reverse mortgage. In order to be eligible for a reverse mortgage, you must own the home in which you live and all people on title must be at least 62 years of age. A reverse mortgage does not have the same rigid credit and income qualifications as a traditional mortgage, because it is understood that a person is either increasing available funds or decreasing their obligations.
Are there any property restrictions on reverse mortgages?
A reverse mortgage calculator does not usually provide you with information on if your property is eligible. To be eligible for a federally-insured reverse mortgage, your home must comply with all guidelines set forth by the FHA. This includes 1-4 unit homes, manufactured homes constructed after 1976, and FHA-Approved condos.
What is a FHA reverse mortgage for purchase?
The federally-insured reverse mortgage for purchase program was first introduced in October 2008. This program allows a prospective homeowner to put forth a larger than normal down payment in lieu of monthly mortgage payments on the property.
Can I refinance my existing reverse mortgage?
Yes. A reverse mortgage can be refinanced into another reverse mortgage or into a traditional mortgage.
What is required of me once obtaining a reverse mortgage?
After obtaining a reverse mortgage, you have all the same responsibilities as a homeowner. This includes remaining current on homeowner’s insurance, real estate taxes, and home repairs. If you do not remain current on these obligations, it is possible that the reverse mortgage could become due and payable.
Does a reverse mortgage require any special processing?
For the most part, the process of obtaining a reverse mortgage is very similar to a traditional mortgage. The one, notable difference is that counseling with a HUD-approved counselor is required. This is required to ensure that all people on title to the home understand the reverse mortgage and so they can get advice from a non-commissioned party.