Q: Does the Lender take title to my home?
A: No. You retain title to your home, just as you would with a traditional mortgage product.
Q: How does an FHA Reverse Mortgage differ from a home equity loan?
A: Both products allow you to convert the equity in your home into cash, but there are important differences between these two types of mortgages.
With a home equity loan, you are required to make monthly payments that start as soon as the loan is closed, and these payments continue until the entire loan amount plus interest has been repaid. To qualify for this type of loan, you must meet the lenders credit and income standards. If you fail to make the necessary monthly payments, the lender could foreclose on you, forcing you to sell your home. With a reverse mortgage, there are no monthly payments as long as the home remains your primary residence, and your credit and income are not factors in the approval process.
Q: What can I use the proceeds from the Reverse Mortgage for?
A: Any purpose that you see fit. Pay off your high interest credit card debts, auto loans and other debts to lower your monthly living expenses. You can also set up your reverse mortgage so that you will receive a guaranteed monthly payment for as long as you live, increasing your standard of living. Your Loan Officer will set up your account so that it properly addresses your financial needs and desires.
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Q: How long does it normally take to complete the Reverse Mortgage process?
A: Typically, about three to four weeks from start to finish. It is a fairly simple process, due to the fact that the only thing that is "Qualified" is your home. The approval process has nothing to do with your income or credit rating.
Q: As my home appreciates in value during the mortgage term, who will receive that money?
A: Under the FHA Home Equity Conversion Mortgage Program, you are required to pay back to the lender only the outstanding balance that is due. Any remaining equity in your home after repayment will go to you or, upon your passing, to your heirs or estate.
Q: What if I decide to sell my home?
A: If you choose to sell your home, the outstanding mortgage balance is due and payable. You or your estate will keep any and all proceeds exceeding the mortgage balance. There is no prepayment penalty on a reverse mortgage.
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