Frequently Asked Questions

What is a Reverse Mortgage?


Reverse Mortgages, also known as a HECM (Home Equity Conversion Mortgage), allows homeowners age 62 or over to access a portion of the equity in their homes without the requirement of a traditional monthly mortgage payment. Please note that the borrower remains responsible for property taxes, homeowners insurance and home maintenance.




Who is eligible for a Reverse Mortgage?


You are eligible to apply for the HECM Loan Program if you are age 62 or older and live in the property as your primary residence.




What kind of homes are eligible for a Reverse Mortgage?


The property can be a single family home a multi-unit property such as a duplex or fourplex, or townhome, manufactured home or condominium.




Are the proceeds from a Reverse Mortgage taxable?


No. Because the proceeds from a reverse mortgage are a loan, they are not considered income to the borrower and therefore are not taxable. Please consult a tax professional for tax advice.




Are there restrictions on how Reverse Mortgage proceeds can be used?


No. There are no limitations on how you may use the money.




Can I buy a home using a reverse mortgage loan?


Yes. The HECM for Purchase (H4P) program was introduced in 2009.




What if I already have a mortgage?


One of the most common uses for a reverse mortgage is to replace current mortgages on the property.




Is interest charged on a Reverse Mortgage?


Yes. Interest accrues on only the portion of the funds that you have drawn on the loan. Money left in a line of credit does not accrue interest until drawn.




How long does the process take to get a reverse mortgage?


The average time to close a reverse mortgage is 45 – 60 days.




How can I receive funds from a reverse mortgage?


You can choose to receive the money in a one-time lump sum payment or as a series of monthly payments. There is also the option of the line of credit that allows you to take funds only when you need them.




Does the bank take ownership of my home?


No. You remain on title as the owner of record and have full control of the property.




Can I have my home in a Trust?


Yes. The trust documents will need to be reviewed by the lender as well as the title company as a part of the approval process.




Can I sell my house if I have a Reverse Mortgage loan?


Yes. You can sell or pay off the loan any time you choose.




What happens when I no longer live in the home?


The loan simply needs to be repaid the same as any loan. The most common scenario is for the family or heirs to sell the home. The proceeds of the sale will be used to pay off the reverse mortgage and the remaining equity goes to the family or estate.