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Reverse Mortgage FAQs
By Hilary Gibson, Staff Writer
How Much Money Can I Get?
The amount of funds you are eligible to receive
depends on your age (or the age of the youngest spouse in the case
of couples), the appraised home value, interest rates, and in the
case of the government program, the lending limit in your area. In
general, the older you are and the more valuable your home (and the
less you owe on your home), the more money you can get.
Does My Home Qualify?
Eligible property types include single-family
homes, 2-4 unit properties, manufactured homes (built after June
1976), condominiums, and townhouses. In general, cooperative housing
is ineligible. However, some lenders have developed private programs
that lend on co-ops in New York.
What are My Payment Plan Options?
You can choose to receive the money from a
reverse mortgage all at once as a lump sum, fixed monthly payments
either for a set term or for as long as you live in the home, as a
line of credit, or a combination of these. The most popular option –
chosen by more than 60 percent of borrowers – is the line of credit,
which allows you to draw on the loan proceeds at any time.
My Understanding is that the Unused Balance in
the Line of Credit Option Has a Growth Feature. Does that Mean I'm
No, you're not earning interest like you do with
a savings account. The growth factor, which is equal to roughly the
interest that you're being charged, takes into consideration that
your home has appreciated in value over the past 12 months and that
you are one year older.
How Can I Use the Proceeds from a Reverse
The proceeds from a reverse mortgage can be used
for anything, whether it’s to supplement retirement income to cover
daily living expenses, repair or modify your home (i.e., widening
halls or installing a ramp), pay for health care, pay off existing
debts, buy a new car or take a "dream" vacation, cover property
taxes, and prevent foreclosure.