Reverse Mortgages Questions

1. My mom is 65 and did a reverse mortgage. Are her kids responsible in any way?

   If your mother took out a reverse mortgage on a home that she owns in her own name, you and your siblings have no obligations.
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2. How does a reverse mortgage affect the equity 5 to 10 years down the road?

   To take out a reverse mortgage, all of the owners must agree to it. With the deed as it stands now, all 7 siblings and your mother would have to give permission. Plus, all borrowers need to be at least 62 to qualify for an FHA -insured HECM (Home Equity Conversion Mortgage). I doubt that all of your siblings would qualify...
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3. Can my mother do a reverse mortgage on our home?

   I don’t know how this could happen.
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4. Are reverse mortgages available if there is a tax lien?

   When an application for a reverse mortgage is processed, the lender will immediately order a title search. Any tax liens will be uncovered by the title company and reported to the lender. The lender will then require that you pay off the tax lien with the proceeds from the reverse mortgage at the closing...
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5. How can my sister stay in the house Mom had a reverse mortgage on after Mom dies?

   The bank holding the reverse mortgage will want, and be legally entitled to, repayment of the money it is owed under that mortgage. Your sister needs to determine how much money is owed to the bank. Then the question becomes how she can pay that money to the bank. This would depend on:
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6. Can you do a reverse mortgage on a plot of land?

   Hello, and thank you for your question. Unfortunately, you cannot do a reverse mortgage on a piece of land that is undeveloped. There must be a residence on the property for a reverse mortgage to take place. In addition, the residence must be FHA approved. For example, bed & breakfasts and working farms are not reverse mortgage eligible properties...
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7. Are funds taken out from a reverse mortgage subject to taxes?

   Funds received from a reverse mortgage are not counted as taxable income. It is no different than taking funds from a home equity loan or line of credit. The funds are from the equity in the house, which you own. You are tapping your own asset. The reverse mortgage holder does not have to report or pay taxes on the cash taken out of a reverse mortgage...
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8. Can I do a reverse mortgage on my mother's house?

   When homeowners take out a reverse mortgage, they do not have to pay anything back as long as they live in the house. If they move out of the house or pass away, the balance including principal and interest becomes due. There is a 6 month grace period for the homeowners or their heirs to pay off the mortgage...
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9. Is the interest on a reverse mortgage recalculated after the holder dies?

   Reverse mortgage interest is not recalculated upon the death of the borrower. The interest rate on a reverse mortgage is determined by current market interest rates + the lender’s margin, or profit. It can be fixed or variable. A fixed rate never changes throughout the life of the lo...
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10. When does it make financial sense to get a reverse mortgage?

    A reverse mortgage can be a big help to seniors who need to tap resources for unforeseen expenses. These include medical and long term care expenses, major household repairs or to supplement low income. For many seniors on fixed incomes, their house is their largest or only asset. It makes sense to use this resource as a last resort...
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11. What are the risks with reverse mortgages?

    The bottom line is there are very few risks with these kinds of loans, provided that you and your mother do your homework, find a trustworthy lender, and make sure she's the right candidate for a reverse mortgage.
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12. Who are the best long term care providers and reverse mortgage companies?

    The best long term care insurance company for you is the one whose policy meets your needs. There are many highly rated carriers that offer long term care insurance, e.g. Genworth, John Hancock, Met Life, to name a few. While the financial strength of the company is important, the features and services offered are equally important...
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13. Will a reverse mortgage continue to accrue interest even during probate?

    You should discuss this with the reverse mortgage lender, as terms and conditions will vary. Generally, though, the interest on a reverse mortgage is due when the house is sold, so if there's a time delay between the death of your parent and the sale of the house, the estate is responsible for the increased...
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14. Should my mother sell me her house now?

    Thanks for your question. It is certainly an important one. Given that mortgage rates are currently extremely low and expected to rise in the future, it might be wise for your mother to sell you the home now, so you can refinance the reverse mortgage into a conventional mortgage.
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15. How do we decide between a reverse mortgage for my father or a personal loan from me?

    Loans between family members are always fraught with potential complications, and your case is no exception. There are a number of issues to consider, but they all boil down to one big issue: What would be the impact of this type of loan on you and your family?
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16. Should I get a reverse mortgage or a bank loan for my elderly folks?

    One difference between qualifying for a bank loan and a reverse mortgage is that borrowers must meet strict credit criteria when applying for a traditional loan. Credit history is not a criterion for a reverse mortgage. Most elderly people do not have sufficient credit scores to qualify for bank loans...
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17. How do we buy a house back that had a reverse mortage?

    You should start with the company that is servicing your grandmother's mortgage. This may or may not be the lender. She should have been receiving monthly statements from the servicing company. The servicing company collects a monthly fee that is charged back to the reverse mortgage...
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18. What are reverse mortgages?

    A reverse mortgage is a financial tool for seniors over age 62 to tap the equity in their homes. Unlike a forward mortgage, no payments need to be made on a reverse mortgage until the owner no longer lives in the house.
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19. Can I deed property to my daughter without selling it and have tenancy?

    You can most likely give the home to your daughter, however, you should have a lawyer review your mortgage to make sure that there is not a provision that would require the mortgage to be paid off in full if you were to do so. You could also give it to her and have a written tenancy agreement that would...
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20. Will a reverse mortgage affect my Medicaid and Medicare benefits?

    Hi Tannylynn. That's a great question. While a reverse mortgage will not effect your eligibility for medicare or social security, it can effect eligibility for need-based government assistance programs such as medicaid.
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