Frequently Asked Questions About Reverse Mortgages
How much does a reverse mortgage cost?
This depends on the loan you take out – the amount and interest rate, as well as the lender’s fees; it also depends on how long you have the loan for. The longer the loan lasts, the more interest it accrues, hence costing you more.
What kind of home can I get a reverse mortgage on?
Reverse mortgages can be taken out on any privately owned home, as long as it meets the lender’s criteria (usually a minimum value of $150,000), and as long as it is the borrower’s primary residence. If the property has multiple owners, then all of the owners must meet the lender’s requirements.
How much can I borrow with a reverse mortgage?
The amount you can borrow with a reverse mortgage depends on the value of your home; the upper limit is 55% of the home’s value.
Who owns my home when I take out a reverse mortgage?
You still own your home when you take out a reverse mortgage; just as with a traditional mortgage, the loan does not impact your ownership. The loan is simply secured against the property.
Will a reverse mortgage affect my benefits?
No, reverse mortgages do not affect benefits, as income from a reverse mortgage is tax free.
If my spouse dies, what happens to our reverse mortgage?
If you own your home with your spouse, the reverse mortgage is maintained after they pass away. For the reverse mortgage to close, both spouses need to pass away or vacate the home.
How will a reverse mortgage affect my children’s inheritance?
This depends on how the reverse mortgage is closed. If you close it or repay it prior to your death, then it will have no more effect than repaying any type of loan. If the reverse mortgage is automatically closed after you pass away, then your estate repays the loan. This naturally reduces the sum of money left to your beneficiaries, but rest assured: if property prices fall, they will not be stuck paying the cost of your loan out of pocket.