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Reverse Mortgage FAQs
By Hilary Gibson, Staff Writer
You can seek counseling from a local
HUD-approved counseling agency, or a national counseling
agency, such as AARP (800-209-8085), National Foundation
for Credit Counseling (866-698-6322), and Money
Management International (877-908-2227). Counseling is
required for all reverse mortgages and may be conducted
face-to-face or by telephone. By law, a counselor must
review (i) options, other than a reverse mortgage, that
are available to the prospective borrower, including
housing, social services, health and financial
alternatives; (ii) other home equity conversion options
that are or may become available to the prospective
borrower, such as property tax deferral programs; (iii)
the financial implications of entering into a reverse
mortgage; and, (iv) the tax consequences affecting the
prospective borrower’s eligibility under state or
federal programs and the impact on the estate or his or
her heirs.
When Do I Pay Back My Loan?
No monthly payments are due on a reverse
mortgage while it is outstanding. The loan is repaid
when you cease to occupy your home as a principal
residence, whether you (the last remaining spouse, in
cases of couples) pass away, sell the home, or
permanently move out. The amount owed can never exceed
the value of your home. Furthermore, if the home is sold
and the sales proceeds exceed the amount owed on the
reverse mortgage, the excess money goes to you or your
estate.
Under What Circumstances Should
I Not Consider a Reverse Mortgage?
Because of the upfront costs associated
with a reverse mortgage, if you intend to leave your
home within 2-3 years, there may be other less expensive
options to consider, such as home equity loans,
no-interest loans or grants that may be offered by your
county government or a local non-profit to repair your
home, or a tax deferral program, if you're having
problems paying your property taxes. Also, if you want
to leave your home to your children, then you should
consider other options, because in many cases, the home
is sold to pay back a reverse mortgage
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