FAQs & Resources

There are several different options to choose from. You can take the money in a lump sum upfront, set up a line of credit, monthly payments, or a combination of all three. Fixed interest rate reverse mortgages only allow for the Single Disbursement Lump Sum payment plan.

The fees and cost of a reverse mortgage are based on a number of items. For example, an origination fee is paid to the broker/lender, a MIP (mortgage insurance premium) is paid to FHA on the Home Equity Conversion Mortgage (HECM), an appraisal fee, and other standard title/settlement/escrow fees. All costs are clearly shown on the Good Faith Estimate (GFE) and all of the closing costs of a Reverse Mortgage are rolled into the laond and not out of pocket (excluding some appraisal and counseling costs). Monthly servicing fees could apply on a JUMBO Reverse Mortgage. Remember that a vast majority of the closing costs of a Reverse Mortgage are rolled into the loan and the totals can vary by the Loan options selected. Speak with one of our Loan Officers and they will help you find the lowest cost options that you might be eligible for.

This is probably the biggest misconception. However, just like any other mortgage, the borrowe still owns their home and remains on title. As with other mortgages, a borrower may face foreclosure if they default on the loan terms.

Yes. Counseling is required with an independent third party HUD-approved counselor to protect borrowers from receiving incorrect information about reverse mortgages. The lender must be in receipt of the counseling certificate before they can close the loan. To locate a reverse mortgage counselor near you, contact your Mortgage Loan Originator or your local HUD office.

While the proceeds you receive from a reverse mortgage are typically not subject to individual income taxation, you will need to consult your tax advisor.

Your heirs may keep your property in the end by paying off the loan balance owed at that time. If your heirs wish to or have to sell the home in the end, they will be allowed to sell the hoe and if there are any remaining profits from the sale after the loan is repaid - these will belong to them (not the lender). If your home increases in value over time and/or if you choose to make a small monthly payment toward the Reverse Mortgage, this will increase the potential equity your heirs might receive when they inherit the property.

Reverse Mortgages have been used as a retirement and financial planning tool for many years. It's not just for the financially challenged, but for those seeking to create retirement income from their home equity in retirement. The leading percentage of those securing a Reverse Mortgage currently have strong retirement assets (IRA's, 401ks, stocks, rental property, etc). Using the money from your home with this program can potentially add longevity to your other income generating assets, and many are using a Reverse Mortgage in the form of a Reverse Line of Credit to add more reserves - being prepared for the FUTURE financial needs they already foresee.

At OneTrust Home Loans we value you and truly care about the outcome of your retirement with such a big decision. Our Loan Officers are highly trained and incredibly knowledgeable, but more importantly they will slow down and listen to what is important to you and your family. We focus on excellence, integrity, disclosing ALL the details with you (including some downsides that other companies might hide), and we ultimately strive to do what is in your best interest - now our own. You will be in great hands with one of our agents and we look forward to speaking with you.

Yes. Most reverse mortgage loans are Home Equity Conversion Mortgages or HECMs. This is a reverse mortgage insured by the U.S. federal government, only available through an FHA-approved lender. In addition to HECM loans, some lenders may offer proprietary reverse mortgage loans, which are not insured by the federal government and are typically designed for borrowers with higher home values. Some state and local governments and non-profit organizations also offer single-purpose reverse mortgage loans. These reverse mortgage loans may be used only for the purpose specified by the lender (for example, home repairs or property taxes). They may only be available in some areas and only for homeowners with low-to-moderate income. These non-HECM reverse mortgage loans are not federally insured.

Yes. One of the hallmark advantages of a HECM reverse mortgage loan is you do not have to repay it until you sell your home, permanently move out of it, pass away, or do not comply with your loan terms. If your heirs are left to settle your estate, and there is an outstanding loan balance after they sell the home, they are not responsible for making up the difference. FHA insurance steps in and makes up the deficit.

No. Unlike most traditional mortgages, you don’t have to boast a certain credit score or have a job to obtain a reverse mortgage loan. What you do need, however, is the ability to show you can comfortably meet the terms of your loan, which include maintaining your home and paying your property taxes and homeowners insurance. To determine whether you can meet that standard, your lender will review your income, cash flow, credit history, and other financial factors as part of a financial assessment. Even if the financial assessment shows that meeting the loan’s monthly obligations would be a financial strain, you may still be loan-eligible with the implementation of a Life Expectancy Set-Aside or LESA. This is a reserve account set up specifically to pay your property taxes and homeowners insurance over the expected life of your loan. This money (considered a “mandatory obligation”) is subtracted from your principal limit. As long as there is money in the LESA, your property taxes and homeowners insurance are automatically paid, which could lighten your financial burden in retirement.

Unlike a home equity line of credit (HELOC), if you select a reverse mortgage line of credit, the line generally cannot be frozen, reduced, or canceled as long as you continue to honor your loan terms. Also, unlike a home equity line of credit (HELOC), which typically requires interest payments soon after your loan closes, a reverse mortgage line of credit requires no ongoing repayment of interest or principal unless you permanently leave your home or fail to comply with your loan terms. Many borrowers use their reverse mortgage line of credit as an expanding financial safety net. There is no charge to keep the line open and whatever portion of the line remains untouched continues to grow at the same rate as the interest accrued on the loan, plus the 0.5% annual mortgage insurance premium. So, if the interest rate on your reverse mortgage is 3.5%, then your available line of credit will grow at 4% (3.5% 0.5%). Altogether, these features can provide great peace of mind.