Reverse Mortgages - FAQ
There is a lot to learn about reverse mortgages and Seattle Mortgage can help you determine if it is the right financial solution for you and your family.
A reverse mortgage is an important decision that requires research and discussion with your family and financial advisor. Below is a list of questions and answers to start you off and you can contact our Reverse Mortgage Specialists for further information to help guide your decision-making.
What is a Reverse
Mortgage?
A reverse mortgage is a special type of loan, which enables you to tap
into the equity in your home and receive cash, a tax-free monthly income*
and/or a line of credit. There are no income or credit qualifications
and there are no monthly payments to make. The loan is not repaid until
you permanently leave your home.
*Consult your tax advisor
How Do I Qualify
For A Reverse Mortgage?
A reverse mortgage is easy to obtain, provided that:
1. You are at least 62 years of age or older.
2. Your home is or is to be occupied as your primary residence.
3. You have substantial equity in your home (proceeds of the reverse mortgage
can be used to pay off existing liens or mortgages).
What Can I Do
With the Money?
You can use the money you receive from your reverse mortgage in any way
you choose:
• Supplement your income
• Home improvements
• Purchase of a new home
• Pay off a current mortgage
• Medical expenses
• Pay off debt
• Buy a new car
• Travel
• College tuition or gifts to family
The possibilities are endless...
How Much Money
Can I Receive?
The amount of money you can receive from a reverse mortgage is determined
by your home value, the number and age of the homeowner(s) and the current
interest rate. A representative from Seattle Mortgage Company will assist
you in evaluating your options and calculate the maximum amount of money
that will be available.
How Do I Receive
the Money?
With a reverse mortgage, you have five payment plan options to choose
from:
1. Tenure option: Receive equal monthly payments for as long as you occupy
your home as your principal residence.
2. Line of Credit: Draw cash from your reverse mortgage whenever and in
whatever amount you choose, up to the available limit. Interest is only
charged on the funds drawn from the line of credit.
3. Lump Sum Cash Advance: You can receive all of your money in a lump
sum upon the closing of your reverse mortgage.
4. Modified Tenure: Set aside a portion of the loan proceeds as a line
of credit, in addition to monthly payments.
5. Term: Receive equal monthly payments for a fixed period of time that
you select, five or ten years, for example.
You can change payment plans as frequently as you wish for a very small
fee.
How is Interest
Charged on a Reverse Mortgage?
The interest on a reverse mortgage is adjustable and is tied to readily
available market indexes. The initial rate is determined at loan closing
and adjusts either monthly or annually. Interest charges do not affect
your monthly payments and you are only charged interest on your loan balance,
which consists of the cash you have received and the financed closing
costs.
What Costs are
Involved with a Reverse Mortgage?
As with a regular mortgage loan, there are closing costs involved with
a reverse mortgage. These fees can be financed into the loan,
and typically include the cost of the appraisal, title insurance, loan
origination, escrow and recording fees. A Seattle Mortgage Company representative
will be happy to provide you with a good faith estimate of the costs involved.
When Does the
Reverse Mortgage Need to be Repaid?
The reverse mortgage becomes due and payable when the borrower permanently leaves the home - whether he or she moves, sells or passes away. Reverse mortgages are typically repaid from the proceeds of the sale of the home, with any remaining equity staying with the homeowner or his or her heirs. If a spouse passes away, the surviving spouse continues to receive the full benefits of the reverse mortgage, with no repayment until he or she decides to permanently leave the home.
Do I Still Own
My Home?
Absolutely. You retain full ownership of your home when you obtain a reverse mortgage. As with any mortgage, the lender has a loan against your property. You make no monthly payments and the loan balance increases across time. When the loan is repaid, the borrower or his or her heirs pay off the loan balance, which consists of the financed closing costs, the cash advanced from the reverse mortgage and the interest that has accrued. The remaining equity stays with the homeowner or his or her heirs.
What is a Counseling
Certificate?
Before applying for a reverse mortgage you are required to meet with an independent reverse mortgage counselor. This free counseling session will help you determine whether a reverse mortgage is right for you. The counseling session can be done either in person or on the telephone, and family or trusted friends are encouraged to participate. At the end of the meeting you will receive a Certificate of Borrower Counseling. Please call 1-800-233-4601 for a list of qualified counselors in your area.
Why Should
I Choose Seattle Mortgage Company as my Reverse Mortgage Lender?
Our companys commitment to customer service and affordable housing solutions has earned the company national recognition as a top lender and is what enables us to offer unique products, such as the reverse mortgage. Seattle Mortgage was the first local, independent mortgage banker based in Washington to offer reverse mortgages.
Please email us or call 1-866-348-4555,
and one of our representatives will be happy to discuss the program in
greater detail.
What Documents
do I Need to Complete a Reverse Mortgage?
Please see our Application Checklist for
a detailed listing of what documentation will be required.
