Reverse mortgages, also known as Home Equity Conversion Mortgages (HECM) are becoming increasingly popular in America. The U.S. Department of Housing and Urban development (HUD) created one of the first forms of HECM's HUD's reverse mortgage is a federally-insured private loan, and it is a safe plan that can give older Americans greater finacial security.
If you are 62 years of age or older and have equity in your home, a reverse mortgage can turn that equity into cash. You can receive your money as a lump sum, monthly payments, line of credit or any combination of these choices. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements and more. Since your home is probably your largest single investment, it's smart to know more about reverse mortgages and decide if one is right for you.
Q: Do I have to pay income tax on the proceeds?
A: Proceeds received from a reverse mortgage are loan advances and not taxable income.
Q: What is a reverse mortgage?
A: A reverse mortgage is a special type of home loan that allows a homeowner to convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to you.
But unlike a tradional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. HUD's reverse mortgage provide these benefits, and is deferally insured as well.
Q: Can I qualify for a HUD reverse mortgage?
A: To be eligible, FHA requires that the borrower is 62 years of age or older, own your
home and must live in the home.
You will receive consumer information from a Kaye
Financial Mortgage Senior Loan Advisor, who will also review your goals and objectives
in order to come to a plan which best meets your needs. There are NO credit, NO income
and NO health requirements.
Q: Do I have to pay income tax on the proceeds?
A: Proceeds received from a reverse mortgage are loan advances and not taxable income.
Q: Will this income affect my Social Security or Medicare benefits?
A: No. Money from a reverse mortgage is not considered income, nor does it affect Social Security or Medicare.
Q: How much money can I get from home?
A: The amount you can borrow depends on your age, the current interest rate, other loans fees and the appraised value of your home, or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you area, the lower the interest rate, the more you can borrow.
Q: Can the lender take my home away if I outlive the loan?
A: NO! Nor is the loan due. You do not need to repay the loan as long as you or one of the borrowers (example, spouse) continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home's value.
Q: Will I still have an estate that I can leave to my heirs?
A: When you sell your home, or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees to the lender. The remaining equity in your home, if any, belongs to you or your heirs. The debt will never be passed along the estate of heirs.
Q: Can we make the process easy?
A: After reviewing your goals and objectives and if you are comfortable with the plans elected, the process moves forward efficiently. We find that the first meeting with a prospective client takes an hour to gather facts and get to know one another. It will be an hour well spent.
Kaye Financial Mortgage Corporation is a proud member of the Senior Lending Network. We are also happy to be recognized as an Approved Lending Institution by the U.S. Development and Urban Development and Equal Housing Lender. |
