Why do I need to get counseling?
Counseling is an important consumer protection that‘s been built into the reverse mortgage process. Prior to applying for your reverse mortgage, you will meet and/or speak with an independent third-party counselor who will make sure you understand the program and review alternative options with you.
You can seek counseling from a local HUD-approved agency or a national agency. Counseling is required for all reverse mortgages and may be conducted face-to-face or by telephone.
I currently have a mortgage or home equity loan on my property? Can I still get a reverse mortgage?
Yes, you may be eligible for a reverse mortgage even if you still owe money on a mortgage or home equity loan. The funds you would receive from the reverse mortgage may be used to pay off whatever existing mortgages you have on the property. If you have a large mortgage on your property, please contact Christensen Financial to find out if you qualify.
How can I use the proceeds from a reverse mortgage?
The proceeds from a reverse mortgage can be used for anything, from supplementing your retirement income to covering your daily living expenses. Some typical uses include repairs or modifications to your home (i.e., widening halls or installing a wheelchair ramp), paying for health care or long-term care insurance, paying off existing debts, buying a new car or taking a "dream" vacation, covering property taxes, and preventing foreclosure.
If I take a reverse mortgage will I leave anything to my estate?
When you sell your home or no longer use it as your primary residence, you or your estate must repay the lender for the cash received from the reverse mortgage, plus interest, monthly service fee, and any other accrued costs. Any remaining equity belongs to you or your heirs. For instance, if you owe $100,000 and you sell your home for $125,000, your estate will get to keep the remaining $25,000. However, if you owe $100,000 and you are only able to sell your home for $95,000, your estate will not be personally responsible for repayment of any amount greater than $95,000.
None of your other assets will be affected by your reverse mortgage loan. If your reverse mortgage is used to preserve other assets, you could potentially leave a larger estate to your heirs.
Do reverse mortgages have a prepayment penalty?
No, you can prepay a reverse mortgage in full at any time without penalty. All that would need to be repaid would be any monies borrowed, which includes the closing costs, service fees, and interest that has accrued. Partial prepayment is also allowed for certain programs, which in turn increases the available line of credit. Please contact Christensen Financial for further explanation on prepayment of a reverse mortgage.
Are interest rates fixed or adjustable?
Both fixed and adjustable rates are available for reverse mortgages. How you are going to borrow the money may determine which program will be more beneficial to you. As reverse mortgage specialists, our goal is to educate you on all programs so you can choose the best option to suit your needs.
Will the bank own my home?
No, you always retain title to your home. You have the right to sell or refinance your home at any time. All you are doing is putting a mortgage against your home, which will be paid back in the future when you sell your home or no longer live there as a primary resident.