Frequently Asked Questions

1. Am I qualified for a reverse mortgage if I currently have an existing loan on my home?
2. My property is held in a Living Trust. Do I qualify?
3. My children and I own the property in joint tenancy. Do we qualify?
4. Does the IRS consider the month advances from the reverse mortgage income?
5. Are mobile homes eligible?
6. My spouse is permanently in a nursing home. Can we participate in a reverse mortgage?
7. Are there restrictions on how I can use the money?
8. Can the lender take my home away if I outlive the loan?
9. Will I still have an estate to leave to my heirs?

Question 1 – Am I qualified for a reverse mortgage if I currently have an existing loan on my home?

Answer – Yes, but the existing loan must be paid off prior to or at the settlement of the reverse mortgage. Quite often the reverse mortgage is used to refinance an existing loan.

Question 2 – My property is held in a Living Trust. Do I qualify?

Answer – Yes, as long as you are the primary trustee and are qualified by age.

Question 3 – My children and I own the property in joint tenancy. Do we qualify?

Answer – Yes, if the children are age 62 or older and live in the property. Otherwise, they would need to be taken off title prior to settlement.

Question 4 – Does the IRS consider the monthly advances from the reverse mortgage income? 

Answer – No, the cash advances are actually loan distributions and are not considered income. The cash advances are tax-free.

Question 5 – Are mobile homes eligible?

Answer – Yes, the home must have been built after June 1976 and have a permanent foundation that is approved by Federal Housing Administration (FHA) with a professional engineer’s stamp.

Question 6 – My spouse is permanently in a nursing home. Can we participate in a reverse mortgage?

Answer – Yes, the requirement is only that one owner occupies the property as a principal residence.

Question 7 – Are there restrictions on how I can use the money?

Answer – No, of course not, after all – It’s your money.

Question 8 – Can the lender take my home away if I outlive the loan?

Answer – No! Nor is the loan due. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home’s value.

Question 9 – Will I still have an estate to leave to my heirs?

Answer – Your heirs will be able to choose whether to keep the house or sell it. If they decide to keep the home, they must pay the balance due on the reverse mortgage. Otherwise, they may sell the home and use the proceeds to pay off the remaining mortgage. They get to keep any excess proceeds from the sale of the house.