Q: Will the lender own my home?
A: No, the lender will not own your home. Just like any other mortgage, your name remains on the title.
Q: Do I need to have good credit for a home equity conversion mortgage?
A: There is no credit score requirement. Throughout the loan process, we look at credit history as part of the financial assessment to ensure you can pay your property taxes and homeowners insurance.
Q: What if my home sells for less than what I owe on the loan?
A: A home equity conversion mortgage is a non-recourse loan. That means you or your heirs will never owe more than your home is worth. If your home sells for less than what is owed on the loan, FHA insurance pays the difference.
Q: Can I get a reverse mortgage if I already have a mortgage?
A: Yes. Many people use their reverse mortgage to pay off their existing mortgage and eliminate their current monthly mortgage payment.
Q: Are there limits on how I can spend the money from my home equity conversion mortgage?
A: If you have a mortgage, it must be paid off first. The remaining money can then be used however you wish. If you do not have a mortgage, there are no restrictions on how the money can be used.
Q: Is this kind of loan used as a last resort for seniors?
A: No. The reverse mortgage program was created for seniors regardless of their financial situation and income level. Some use the loan proceeds to pay debts while others use it to live a more comfortable retirement without a required monthly mortgage payment.*
Q: Who is eligible for a home equity conversion mortgage?
A: Homeowners age 62 and older who can meet their financial obligations and have enough home equity to qualify.
Q: Can my family be involved in my decision and the process?
A: Absolutely. We encourage family members to be involved in their loved one’s decision. Meetings, phone calls, educational materials—it’s helpful for the client if everyone involved understands the program and the process.
Q: Can I lose my home because I live longer than expected?
A: No, you cannot lose your home for living longer than expected.
Q: Why are you checking my credit history?
A: Although there is no minimum required credit score, we review your credit to determine your ability to meet financial obligations such as property taxes, homeowners insurance, and home maintenance costs.
Q: What is a financial assessment?
A: The federal government implemented a financial assessment to help protect senior citizens. The financial assessment process analyzes the client’s credit history, their assets, expenses, and cost of property taxes and homeowner’s insurance.
This process helps borrowers understand their current financial situation and allows lenders to discern whether the borrower can manage their financial obligations. If the borrower does not meet U.S. Department of Housing and Urban Development (HUD) criteria set by the financial assessment guidelines, the lender is required to withhold a Life Expectancy Set-Aside (LESA) from the loan proceeds to pay property taxes and homeowners insurance.
*Homeowner is responsible for property taxes, homeowners insurance, and maintenance of your property.
Q: Will my children have to pay for the loan if I pass away?
A: Your heirs have a few options.
- Your heirs can sell the home, pay off the loan and keep any remaining money from the sale.
- Your heirs have the option to retain ownership. If they decide to keep the home, they must pay 95% of the home’s appraised value or the loan balance—whichever is less.
- Your heirs can turn over the loan to the servicer to sell the property. This often occurs when an heir is not interested in keeping the home, and the balance is higher than the home’s value.