What Is a Reverse Mortgage?

No. A reverse mortgage allows homeowners to retain the title and ownership of their home for as long as they live in the home and the loan remains in good standing. Like other loans, this requires the borrower to keep up with property taxes, insurance and maintenance.

The amount of money you can receive from a reverse mortgage depends on four factors:

• Your age
• Your home value (based on an appraisal that will be part of the loan process)
• The interest rate of your loan
• Your current mortgage balance (You must use the proceeds to pay off your existing mortgage.)

No, Social Security, Medicare or pension benefits will not be impacted. Funds from a reverse mortgage are considered loan proceeds and not income. In fact, a reverse mortgage could increase your Social Security benefits. A reverse mortgage can help delay the time you need to begin accessing Social Security, therefore increasing the amount of benefits you are eligible to receive each month. However, in some cases need-based benefits could be affected, such as Medicaid or SSI, since the proceeds from a reverse mortgage improve your monthly cash flow.

A reverse mortgage is repaid when the last borrower (or even the last eligible non-borrowing spouse) leaves the house or passes away. Typically, the home is sold and the proceeds from the sale are used to pay back the loan. The heirs will receive any remaining equity. If your heirs decide to keep the home, they can pay back the loan in other ways such as by refinancing into a conventional loan.

Not if you fulfill the obligations of the loan, which include paying your property taxes and homeowners insurance and keeping up with basic maintenance and repairs. If you do not uphold these responsibilities, the loan may become due, and the house may be sold to pay off the loan. If you fulfill these obligations, your loan remains in good standing.

Reverse mortgage loan funds can be disbursed in a full or partial lump sum, as a line of credit, through monthly payments, or as a combination of any of these.

The length of the loan depends on the way in which you choose to access the loan proceeds. You can access proceeds in one lump sum, in monthly installments for a set term or for as long as you live in the home, or in a line of credit. An AAG home equity solutions professional will walk you through your options to determine the best fit for you.

In general, mobile homes are not eligible. However, some HUD-approved manufactured homes that meet FHA guidelines are eligible. You must have a HUD seal affixed to the outside of the home, which confirms that the home meets Federal Manufactured Home Construction and Safety Standards. An AAG specialist can help you determine if your mobile home is eligible.

You can use the proceeds of your reverse mortgage loan for almost anything. Common uses include:

• Paying off an existing mortgage (a requirement of the loan)
• Paying medical bills
• Paying off a large bill
• Financing home repairs and renovations
• Paying for in-home care
• Spoiling the grandkids

Before obtaining a reverse mortgage, you must undergo reverse mortgage counseling, which can be completed over the phone in some cases. You can find a list of HUD-approved counseling agencies near you here. You may also call AAG for a list of agencies near you.

If you pass away while you have a reverse mortgage loan, any funds that have not been accessed will be applied to your estate (they remain as equity in the home). When a borrower dies, heirs are given six months to either repay the loan or agree to the sale of the home. The proceeds from the sale are used to repay the loan and any remaining funds belong to the heirs.

The fees and interest rates of your reverse mortgage loan are tied to fixed or variable rates and based on an index and a margin. An AAG specialist can calculate your exact fees and rates based on the loan options you choose.

No, this is a common misconception. In fact, when used properly as part of an overall retirement income strategy, reverse mortgages can be a smart financial planning tool. In the last several years, retirement researchers and financial advisors have begun to embrace the use of reverse mortgages in retirement income planning.

A reverse mortgage is a unique financial tool unlike any other in that it offers borrowers the ability to access their home equity without the burden of monthly mortgage payments.¹ Using a reverse mortgage, you can access cash to supplement your income in retirement and age in place in your home.

If the value of your home increases, your equity increases. When you have a reverse mortgage, this means that if the home is sold to repay the loan after you pass away or decide to leave, more funds will be left over for you or your heirs. If there is a significant increase in value, you can refinance to withdraw more of the equity in the home.

The loan can last for the rest of your life so long as you uphold your obligation to pay taxes and insurance and keep the home in good repair.

If you change your mind within three days of closing the loan, you can cancel it. This is called the rescission period, and it gives borrowers the ability to cancel the loan without penalty. If you decide to cancel the loan after the rescission period, you can do so by paying back any proceeds you received plus the accrued interest.

At American Advisors Group, we love our clients, and they love us back! See AAG's Customer Reviews page and get a glimpse of what it means to be a part of the American Advisors Group family.

We at American Advisors Group pride ourselves on our thoroughness. We sit down with you and guide you through each phase in the process, explaining every step of the way. It is a very personal process, as we get to know you and make it a priority to fully understand your situation and needs. We treat our clients not as numbers, but as a family.

At American Advisors Group, our Reverse Mortgage Professionals go through a comprehensive training program and licensing process. They must pass federal and state tests in order to get their Loan Officer License through the National Mortgage Licensing System. Our professionals are also trained in customer service, and how to connect with people. Because of this, our loan officers are thoroughly knowledgeable and strive to share as much of that knowledge with you as possible, so you are able to make an educated and informed decision. Your particular situation is unique and deserves the individualized time and attention of one of our Reverse Mortgage Professionals.