Reverse Mortgage Information and FAQ’s
Some of us live in urban cities while many are in smaller quaint towns. Others choose the lush mountains and some choose the serenity of the high desert and plains.
We feel that it’s in your best interest to work with local specialists who are familiar with the lingo and real estate financing rules of Colorado. At least the professionals at Colorado Reverse Mortgage are local people and share state and community values.
While there are many different reasons for you to be looking for Reverse Mortgage Information, many of the questions asked are the same. Reading the FAQ’s and the Reverse Mortgage Information it contains, is a great start. And, if you’d like Reverse Mortgage Information for questions unanswered, just give us a call. The Reverse Mortgage Information that we share is for you, our neighbors.
What is a "Mortgage?"
What is a HECM Reverse Mortgage?
What does HECM stand for?
Who qualifies for a reverse mortgage?
Do my spouse and I both need to be 62 or older?
“The Non-Borrowing Spouse must:
- Have been the spouse of a HECM mortgagor at the time of loan closing and have remained the spouse of such HECM mortgagor for the duration of the HECM mortgagor’s lifetime;
- Have been properly disclosed to the mortgagee and origination as a Non-Borrowing Spouse in the HECM documents; and
- Have occupied, and continue to occupy, the property securing the HECM as the Principal Residence of the Non-Borrowing Spouse.
In the event the last surviving mortgagor predeceases a Non-Borrowing Spouse, the due and payable status will be deferred for as long as a Non-Borrowing Spouse continues to meet all the qualifying attributes stated in the above section. In addition, such Non-Borrowing Spouse must satisfy and continue to satisfy the following:
- Within ninety (90) days from the death of the last surviving HECM mortgagor, establish legal ownership or other ongoing legal right to remain (e.g., executed lease, court order, etc.) in the property securing the HECM;
- After the death of the last surviving mortgagor, ensure all other obligations of the HECM mortgagor(s) contained in the loan documents continue to be satisfied; and
- After the death of the last surviving mortgagor, ensure that the HECM does not become eligible to be called due and payable for any other reason.”
Are there limitations as to how I use my proceeds
Can a reverse mortgage be taken out if there is already a mortgage on my home?
But remember! You are still responsible for maintaining the property, paying property taxes and homeowner’s insurance. A Life Expectancy Set Aside (LESA) may or many not be created to help you with the property taxes and homeowner’s insurance. Contact us for more information.
Are taxes due on the reverse mortgage proceeds?
Is is okay that our home is in a “Living Trust”?
At time of closing, your signature will be a bit longer than usual. As an example, if I were the trustee, I would have to sign all the documents as “P. Mace Kochenderfer, Trustee of the P. Mace Kochenderfer and Kara M. Kochenderfer Revocable Living Trust”. Be prepared to have sore hands at the end of that closing!
Warning: As a shortcut, some Loan Officers will advise you to temporarily take the home out of the trust and then put it back into the trust after closing. That mis-information should send up warning flags about the experience level of that Loan Officer! Think of the consequences if, shortly after you removed the house from the Trust, you unexpectedly died. Your home would be excluded from the safety of the Trust and your heirs would likely have a cumbersome Probate. Additionally, the company responsible for servicing your new reverse mortgage and providing you information for the term of the loan must still approve the Trust before you put the home back into it. What if they don’t like the wording? Wouldn’t you rather have known this information before you closed on the Reverse Mortgage?
Can I do a reverse mortgage since I have Power of Attorney (POA) for my parents?
Does the money from a reverse mortgage affect Social Security, Medicare or pension benefits?
Can the interest charged on my loan principal be deducted for tax purposes?
What are the upfront costs associated with a reverse mortgage?
What type of homes won’t qualify for a reverse mortgage?
Second homes, timeshare and investment or rental properties do not qualify. Other properties may not qualify if they are deemed “too unique” by an underwriter. We’ve seen “Earthships”, razor wired compounds, glass houses, homes with no interior walls, geodesic homes and other creative homesteads that rarely are accepted by lenders; it is possible, but rare. If you have concerns about your property, its location or the availability of comparable homes, please share that with us early on… and send photos!
What is due when the loan is repaid?
Will I ever owe more than my home is worth?
Does the bank now own my house?
Remember, property taxes and homeowner’s insurance must be kept current and the property must be maintained in order to avoid early repayment of the entire loan amount. Under some rare circumstances the loan servicer or FHA may be required to foreclose and only if you fail to meet your obligations under the reverse mortgage.
What are my responsibilities as a homeowner with a reverse mortgage?
When does the loan become due and payable?
Do I or my heirs have to sell the property to repay the loan?
Since we are specialists and only work with reverse mortgages, we are happy to discuss many of the heir’s options and give them names of quality Realtors or Conventional Mortgage Loan Officers who can assist them or give them further information.