Answers to Frequently Asked Questions About Reverse Mortgages & Home Equity Conversion Mortgages (HECM)

Q: Is it really true that I do not have to make a monthly payment on a reverse mortgage loan?

A: Yes! With an FHA insured Home Equity Conversion Mortgage (HECM) the program enables you to access your equity in your home now and defer the re-payment of the loan until a later date when you sell the home or no longer occupy the home. You are still required to pay property taxes, homeowners insurance and any HOA dues.

Q: Who is eligible for a reverse mortgage?

A: Homeowners that are 62 and older and occupy a home, condo, or manufactured home that meet FHA standards.

Q: How much can I borrow with a home reverse mortgage?

A: The maximum that can be borrowed is based on a HUD formula that factors in the age of the youngest borrower, the loan's interest rate, anticipated appreciation rate of your home and the current value of your home or FHA lending limit.

Q: What is a jumbo reverse mortgage?

A: Jumbo reverse mortgages are designed for high value homes that exceed traditional FHA reverse mortgage lending limits. While they are not insured by FHA, they do follow similar qualifying and underwriting guidelines.

Q: How does a reverse mortgage differ from a standard home equity loan?

A: With a standard home equity home loan, you must begin to make regular payments as soon as the loan is taken out. You must be able to prove that you have monthly income and sufficient credit to qualify for a loan. With a Home Equity Conversion mortgage or reverse mortgage, there are limited income and credit requirements and no monthly payments necessary.

Q: Do I maintain full home ownership?

A: Yes! You own your home and hold the title the same way you have owned your home with any regular mortgage. You can move, sell your home or pass it on to your family or heirs at any time. The reverse mortgage would be paid off the same way as any other mortgage at this time.

Q: Can I make payments on my reverse mortgage?

A: Yes! You can make payments on a reverse mortgage, the same way you would make payments on a conventional mortgage. You can pay as little or much as you want. Many borrowers see a significant faster pay off period because of the low reverse mortgage interest rate.

Q: Will money I receive from a reverse mortgage affect my Social Security or Medicare benefits?

A: No, moneys received will not affect eligibility for retirement, survivorship, disability, or Medicare benefits payable under the Social Security Act. A reverse mortgage is a mortgage loan and not considered income.

Q: Do I have to pay taxes on the money that I receive from a reverse mortgage?

A: No, a reverse mortgage is a home loan and as such is not taxable.

Q: Can I be forced to vacate my home?

A: No, as long you continue to occupy your home as your principle residence, maintain your property, and keep your taxes and homeowner's insurance current, you can never be forced to sell or vacate your property.

Q: Can I ever owe more than my home is worth?

A: No, the FHA insurance included in the loan protects you, your family and heirs from ever owing more than your home is worth. It is considered a non-recourse loan.

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This information is not intended to be a substitute for legal, tax or financial advice.

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Omni Fund Inc. NMLS MB# 4869.
BRE# 0143-0833
Toll Free 1-877-307-6454

This material is not from HUD or FHA and has not been approved by HUD or any government agency.