This is the third in a three part series of frequently asked questions about Reverse Mortgage. You can find Part 1 here and Part 2 here. If you have questions that are not currently listed, please don’t hesitate to contact me directly.
Will I Lose My Government Assistance If I Get a Reverse Mortgage?
Because a reverse mortgage is not considered income, it does not affect regular Social Security or Medicare benefits. However, if you are on Medicaid or other public assistance, any reverse mortgage proceeds that you receive may affect your eligibility. Reverse mortgage funds that you retain would be considered an asset, just as other bank funds. Working with a reputable reverse mortgage lender will ensure you are properly reporting income and not caught by surprise.
What is a Reverse Mortgage Appraisal?
A home appraisal by an FHA approved appraiser is required for every reverse mortgage loan. Once your reverse mortgage lender has received your application, you will be contacted by an appraiser to schedule a time to conduct the appraisal. The appraisal will consist of an inspection, where the appraiser will walk through your home and possibly take photographs. Once the walk-through is completed, research will be done to determine your home’s worth based on various factors, including comparable home sales in your area. After the research has been done, an appraisal report will be generated which will include all of the factors that went into determining your home’s appraised value.
How Do I Spot a Reverse Mortgage Scam?
Unfortunately con-artists often prey on the elderly through reverse mortgage scams, but there are several ways to spot such activity. Be skeptical of lenders who solicit through means such as television, door-to-door, churches and community centers, direct mailers, or other extensive advertisements. Asking for large amounts of money up front is a very clear indicator. Anything required beyond a routine appraisal deposit of approx $300 is cause for concern. Steer clear of reverse mortgages that are marketed as “Foreclosure Assistance”. A high pressure salesperson is a red-flag, as it is important to clearly understand what you are signing and to have any questions thoroughly answered. Working with a reputable lender is critical when making such a major decision as obtaining a reverse mortgage. Learn more about reverse mortgage scams here.
What Happens if the Borrower Moves Into a Senior Care Facility or Something Similar?
A reverse mortgage becomes due and payable when the last borrower moves out of his or her home permanently. For instance, moving into a senior care facility, selling the home, passing away or moving in with the children. In the case of a married couple, if both spouses are on the loan as long as one spouse remains in the home the loan will continue without hiccup.
What Happens to a Reverse Mortgage After the Owners Pass?
When the homeowner passes – or the last spouse in the case of a married couple – the home will transfer into the estate or a specific person according to the wishes expressed in the homeowner’s will. At this time there are three main options: pay off the remainder of the loan, obtain a conventional loan, or sell the home. For more extensive details about each of these options, read this article on my blog.
Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington. Contact Janis and learn if reverse mortgage is right for you.
Do you remember two and three decades ago? When we worked hard, saved for retirement, invested in our 401k’s, paid down our mortgages…all while dreaming of the years we’d finally be able to retire? It was an optimistic time and so many did everything right. Unfortunately many of those same dedicated individuals faced trouble during the economic downturn less than a decade ago. With lay offs and investments gone sour, soon-to-be retirees had to tap into their 401k’s to stay afloat, potential pensions went stagnant, and they watched their retirement dreams dwindle. Retirement and financial planners have been picking up the pieces ever since, trying to determine how these hard working Americans can still enjoy the golden years they deserve. And what they are discovering is that one of the largest assets of many retirees – their home – has been grossly overlooked as a retirement tool. Reverse mortgages were only considered a last resort and were rarely discussed, let alone considered part of an upfront retirement plan. Well, things have changed – a lot.
