Frequently Asked Mortgage Audit Questions
- What is a reverse mortgage?
A reverse mortgage allows a homeowner to turn the equity in their home into a monthly income or lump-sum cash, BOTH TAX FREE. NO PAYMENT is required for as long as you live and maintain the home as your primary residence.
- How do I qualify?
The applicant(s) must be 62 years of age or above and own a home. There are NO credit, NO income and NO health requirements.
- How much money can I receive?
The amount available is based on several factors: your age, home value, current interest rates and the specific plan you choose. Generally speaking, the higher the age, the higher the value of the home, the more money is available.
- Who really owns my home?
You do. A reverse mortgage is just a lien similar to a traditional mortgage. You can sell you home at any time.
- Do I have to pay income tax on the proceeds?
Proceeds received from a reverse mortgage are loan advances and not taxable income. For your specific situation, we recommend that you consult your tax advisor.
- How safe are FHA insured reverse mortgages?
They are VERY SAFE. You or your heirs retain ALL ownership rights. It is impossible to fall behind on payments because there are none to make. And reverse mortgages are "non-recourse" mortgages so a debt CANNOT be passed to your heirs as a result of doing an FHA insured reverse mortgage.
- Can a person ever lose their home?
NEVER. As long as the home remains the borrower's primary residence and you keep the home insured and your property taxes current.
- Who gets my home after my death?
Your estate does. Your heirs have the CHOICE of keeping or selling the house. If they decide to sell the home, the proceeds of the sale would be used to repay the mortgage, with the remainder going to your heirs.
- Will this income affect my Social Security or Medicare benefits?
NO. Money from a reverse mortgage is not considered income, nor does it affect Social Security or Medicare. Homeowners on SSI or Medicaid should observe pertinent rules.
