1. Reverse Mortgages
10 Fast Facts about a Reverse Mortgage
• All borrowers must be 62 years or older.
• No repayment is made until the home is sold, or the last borrower
permanently moves out, or passes away.
• You will never owe more than the value of the home at the time the loan
becomes due.
• No income or credit qualifications.
• Interest is accrued monthly and becomes due at the time the loan is repaid.
• When the loan is due, your heirs have choices: they can repay the loan and
keep the house, refinance the debt and keep the house, sell the home and
repay the loan through the sale, do nothing and let the lender foreclose.
• Social Security benefits and Medicare are not affected by a reverse
mortgage, but SSI and Medicaid benefits are.
• You continue to own your home – the lender does not take control of the
title. The title will remain in the home-owner’s individual name.
• Some interest rates are adjustable and can change periodically; however,
after the loan is closed the adjustable rate will not affect the amount you will
receive. That amount is locked in and agreed upon at closing.
• Closing costs and fees incurred can be financed into the loan.
Key Advantages to a Reverse Mortgage
• Limited risk of default. Lenders have no claim on the home, as long as
occupancy requirements, property taxes, and home owner’s insurance is
maintained.
• You never owe more than your home’s value at the time the loan is repaid.
• The money is not taxable when it is dispersed.
• There are no restrictions on how you use the funds – trip around the world,
get a hearing aid, purchase long-term care insurance, anything goes.
• There are flexible payment options – lump sum, line of credit, monthly cash
advance or a combination of these methods.
• There are no income or credit qualifications.
• You retain home ownership and the ability to live in your home for as long
as you want even after reverse mortgage funds are exhausted.
• Some reverse mortgages are federally insured (HECM), and even if the
reverse mortgage lender defaults, you still continue to receive your payments
from FHA. Recommended!

2. • The older the borrower the larger the cash payments can be.
• The homeowner is not personally responsible for repayment – only the
residence is security for the Reverse Mortgage.
Disadvantages of a Reverse Mortgage
• If you are currently or will be eligible to receive low-income assistance from
the State or Federal government (like Medicaid for nursing home care), a
Reverse Mortgage may disqualify you from assistance.
• There may not be any equity left in your home for your heirs.
• Reconsider a Reverse Mortgage if you plan not to occupy your home within
5 years.
• Lack of complete disclosure of all the costs involved by the lender/broker.
• The longer the reverse mortgage exists, the greater the loan becomes,
potentially evaporating the remaining equity in the home.
• Not all homes are eligible – vacation homes, mobile homes, rental homes,
houseboats, etc. Homes must meet FHA guidelines.
• Most traditional home mortgage lenders do not offer reverse mortgages.
• Must meet with a counselor before getting a Reverse Mortgage.
• Home remodeling contractors often state that they are getting you a Reverse
Mortgage when in fact they’re getting you a home equity loan or a home
remodeling loan at a very high rate, points and fees.
Find Out More Information on Reverse Mortgages at:
AARP Foundation Federal Trade Commission
601 E. Street, NW Consumer Response Center
Washington, DC 20049 600 Pennsylvania Avenue, NW
1-800-209-8085 Washington, DC 20580
www.aarp.org/revmort/list 1-877-382-4357
www.ftc.gov/credit
US Department of Housing and Urban Development
1-888-466-3487
www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm
National Reverse Mortgage Lenders Association
www.reversemortgage.org