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Frequently Asked Questions
Frequently Asked Questions about HECM Reverse Mortgages.

Q. How much does a reverse mortgage cost? What are the out of pocket expenses?
Q. Are Reverse Mortgage proceeds taxable income, and can they affect my social security or government benefits?
Q. Are there any limits on how I can Use the money from a reverse mortgage?
Q. Am I required to pay anything while participating in the HECM Reverse Mortgage?
Q. Why do I need to speak with a counselor?

Q. How much does a reverse mortgage cost? What are the out of pocket expenses?
Ans. Many of the same cost associated with a traditional mortgage apply to a HECM Reverse Mortgage. There is an additional cost for the Mortgage Insurance Premium (MIP) on all FHA Home Equity Conversion Mortgages (HECM). The MIP insures the borrowers and the lender against default and or foreclosure. The MIP insures the borrowers that they can never owe more than what the property is worth, never leaving their heirs with a debt, and when the time comes that both borrowers pass away the MIP gives the heirs 12 full months to either refinance or sell the property (traditional mortgage only allows 30days) . The out of pocket expenses are similar to a traditional mortgage (if you are having financial problems your lender may be able to help).

Q. Are Reverse Mortgage proceeds taxable income, and can they affect my social security or government benefits?
Ans. Funds from a HECM Reverse Mortgage are tax free; its your money, not additional income. A reverse mortgage does not affect your Medicare or Social Security, but it can affect Medicaid or Supplemental Security Income. If you receive a lump sum payment from a reverse mortgage, any amount retained the month after you receive the funds count as additional source of income, and could affect SSI and Medicaid coverage (consult your tax professional to get better understanding).

Q. Who owns my home while I am in the HECM Reverse Mortgage? How long do I have to be in the HECM Reverse Mortgage before I can sell it?
Ans. You hold title to your home in the HECM Reverse Mortgage just the same as with a traditional mortgage. Once you get into the HECM Reverse Mortgage, there are no prepayment penalties you can sell the property at anytime.

Q. Are there any limits on how I can Use the money from a reverse mortgage?
Ans. There are no limits on the way you can Use the money from the HECM Reverse Mortgage. Many people Use the money to: Pay for medical expenses Buy another property Pay for grandchildren’s tuition Pay down/ off debts Live a better life style

Q. Am I required to pay anything while participating in the HECM Reverse Mortgage?
Ans. No payments are required for the reverse mortgage, however if you decide to make a payment, you can make one at anytime.

Q. Why do I need to speak with a counselor?
Ans. The counseling is a safe guard to protect consumers from fraud and predatory lending practices. The counselors are there to help the consumers get a full understanding of the pros and cons of a HECM Reverse Mortgage. The client then receives the counseling certificate which allows the borrowers to proceed to the next step in the process. The government requires that all who desire to enter in the HECM Reverse Mortgage undergo a counseling session regardless if the spoke with their attorney, financial advisor or tax preparer.