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Reverse Mortgage Frequently Asked Questions

We’ve talked to thousands of borrowers who all had very specific questions about how a reverse mortgage works. We’re sharing the most commonly-asked questions and our answers, in straightforward language. When you talk with your Equity Home Loan Solutions (EHLS) reverse mortgage specialist, you can rely on straight talk in everyday English. Our goal is clarity.

Q: Do I need a certain income level to qualify for a reverse mortgage?

A: No. Qualification for a reverse mortgage is NOT based on income, or on credit rating or the state of your health. Qualification is based solely on age and equity. To qualify for a reverse mortgage, all homeowners on the title must be at least 62 years old, and you must have accrued some equity (the value of the home must exceed any mortgage obligations on the home).

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Q: Can I get a reverse mortgage if I still have a mortgage on my home?

A: Yes. You don’t have to own your home outright to qualify for a reverse mortgage. When your reverse mortgage is funded, any existing mortgage obligations you may have – first mortgage, 2nd mortgage, home equity line of credit – will be paid off. With a reverse mortgage, you eliminate a monthly mortgage payment.

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Q: Will I have monthly mortgage payments?

A: No. That’s one of the reasons so many borrowers are giving serious consideration to a reverse mortgage. With a reverse mortgage, there are never any monthly mortgage payments. You, the borrower, will be responsible for payment of property taxes, homeowners insurance, and general upkeep of the home. That’s the extent of your obligation.

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Q: Can I get a reverse mortgage if mine isn’t a single-family home?

A: Yes. Eligible property types include single-family homes, 2 to 4-unit multi-family homes (one unit must be your primary residence), manufactured homes that meet FHA requirements, and HUD-approved condos.

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Q: Do I have to get my home appraised?

A: Yes. The current market value of your home is one of the most important elements in qualifying for a reverse mortgage. A current appraisal is essential, and may result in your qualifying for a larger loan amount than you might obtain with other loan types.

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Q: Can I sell my home if I have a reverse mortgage?

A: Yes. You may sell your home whenever you wish, with no pre-payment penalties. If you sell your home, your reverse mortgage will become due, and your loan balance must be paid.

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Q: Once I have a reverse mortgage, can I ever refinance?

A: Yes, you can refinance a reverse mortgage. If you ever consider refinancing, your EHLS reverse mortgage specialist can guide you through the process.

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Q: Is it true I would have to pay something called a Mortgage Insurance Premium?

A: Yes, you do have to pay a mortgage insurance premium with a federally insured reverse mortgage (HECM). This premium protects you from ever owing more than the value of our home. If your loan balance ever exceeds the current market value of your house, your reverse mortgage will be unaffected. Even in situations where your lender goes out of business, you outlive the term of the loan, or the value of your home depreciates, you will still receive any payments due to you under the original terms of your reverse mortgage, and you will never owe more than your home is worth.

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Q: How much money can I get if I take out a reverse mortgage?

A: It depends on these factors: your age, the value at which your property is appraised, and the type of loan you opt for.

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Q: Are there any fees to be paid with a reverse mortgage?

A: The fee structure for a reverse mortgage is similar to that of a traditional mortgage, including appraisal fees, origination fees, and closing costs; however, these fees can be financed as part of your reverse mortgage, to eliminate or reduce out-of-pocket costs. Additionally, FHA has imposed strict requirements and caps on fees to keep them at a minimum for reverse mortgage borrowers.
Your EHLS reverse mortgage specialist will provide you with a Total Annual Loan Cost document, or “TALC”, which details the total transaction costs over the projected life of your loan, so you’ll know in advance all the costs you will incur in obtaining your reverse mortgage.

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Q: How long does it take to close a reverse mortgage and obtain funding?

A: Typically it takes 30-60 days to fund a reverse mortgage, which is a little longer than with a traditional mortgage. A reverse mortgage is subject to additional FHA/HUD requirements, which can lengthen the closing process.

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Q: How do I know if a reverse mortgage is right for me?

A: That depends on your unique situation. For starters, a reverse mortgage is a loan, and like any other kind of loan, if you don’t really need the money, then don’t borrow it. Reasons why getting a reverse mortgage may not be the right choice for you include:

  • Your primary goal is to obtain investment money.
  • You plan to move a in a couple of years.
  • You have enough monthly income and other assets to comfortably pay your bills and debts and to live the lifestyle you want.

In summary, you need to look at your entire financial situation and goals as well as alternative financing options. Your EHLS reverse mortgage specialist can assist you in evaluating your circumstances and explaining these alternatives and options to you.


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Q: Is a reverse mortgage more expensive than a traditional mortgage?

A: It depends on your financial situation. For someone with great credit and enough income to afford monthly mortgage payments, then a traditional mortgage typically would be less expensive. In that case, reverse mortgages can have higher interest rates than traditional mortgages to account for the borrower making no monthly payments until the loan is due. However, with a reverse mortgage, you have a protection that a traditional mortgage does not provide: you will never owe the lender more than the value of your home.

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Q: Can the terms of my loan be altered by a new lender/servicer?

A: No. Once a reverse mortgage is funded, the terms are set and cannot be changed by a new lender or a new loan servicer.

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Q: Do I have to pay taxes on the proceeds I receive from taking out a reverse mortgage?

A: Typically, no. In general, the proceeds you receive from a reverse mortgage are regarded as a loan, not as taxable income. However, there are variations from state to state, so please consult with your tax advisor about your individual circumstance.

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Q: Can the lender take ownership of my home?

A: No. You remain in your home for as long as you like with a reverse mortgage, and you or your heirs retain title and ownership of your home; title does not transfer to a lender. When the reverse mortgage loan becomes due, the lender is only entitled to the outstanding loan balance. The loan balance on a reverse mortgage only becomes due when or if:

  • The last borrower passes away.
  • You sell the home.
  • You permanently move to a new principal residence.
  • You, or the last borrower, fail to live in the home for 12 months in a row. An example of this situation would be if you (or the last borrower) were to have a 12-month or longer stay in a nursing home.
  • You do not pay property taxes or homeowners insurance.
  • You allow the property to deteriorate and do not make necessary repairs.


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Q: How do I explain a reverse mortgage to my children?

A: Today’s reverse mortgage is a Government-insured loan program, through FHA HECM (Home Equity Conversion Mortgage). An FHA/HUD-approved lender lends you an amount of money based on the equity or value in your home. This amount is paid to you in either an up-front lump sum, in regular payments, or is available as a line of credit.

  • You retain title to your home.
  • You stay in your home as long as you wish.
  • The loan becomes due only if you sell your home, if you move out of your home, if you pass away or if you fail to pay the property taxes and homeowners insurance or to adequately maintain the property.
  • You have no monthly mortgage payments.
  • It’s easy to qualify for a reverse mortgage because there are no income or credit requirements.

There are a number of borrower safeguards provided with today’s reverse mortgages – see the ‘Borrower Safeguards’ page for more detailed information.

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Q: Will my Social Security and Medicare benefits decrease if I get a reverse mortgage?

A: Typically, no, but please consult with your advisor about your particular circumstances. In general, the proceeds you receive from a reverse mortgage are regarded as a loan, not as income, and therefore your Social Security and Medicare are not affected. However, certain need-based government aid programs, such as Supplemental Security Income (SSI) and Medicaid, may be affected. We recommend that you consult your advisor to determine the specific rules.

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Q: Is it true that I can use a reverse mortgage to buy a home?

A: Yes. It’s referred to as a reverse mortgage for purchase. With this loan product provided by the 2008 Housing and Economic Recovery Act, you can purchase a new home with a reverse mortgage and never have to make any monthly loan payments. Many current homeowners seeking to downsize have found the reverse mortgage for purchase offers unique financial benefits. Your EHLS reverse mortgage specialist can fill you in on the process for a reverse mortgage for purchase.

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Q: If I leave my house to my children, will they be held responsible for repayment of my reverse mortgage?

A: No. One of the most valuable protections in an FHA HECM reverse mortgage is that you or your heirs will never owe more than the value of your home. This is because a reverse mortgage is a ‘non-recourse loan’, which means that the borrower (or heirs) can never owe more than the home’s value at the time the loan becomes due, even if the loan balance exceeds the value of the home.

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Q: If I take out a reverse mortgage on my home, will there be anything for my children to inherit?

A: Your children may still inherit money from the sale of your home, even though you’ve taken out a reverse mortgage. The major factors are: how much your home continues to appreciate, the total amount you borrowed, and your age. When your loan becomes due, if the loan amount owed is less than the value of the property at that time, your heirs may inherit the difference. If your children would like to keep your home in the family once you pass away, they will have the option to pay off the reverse mortgage by refinancing with a traditional mortgage or by using other available sources of cash.

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When you call EHLS, experience answers. 1-888-235-6414