Reverse Mortgages FAQ - Part 1

You spend years of your life paying off your mortgage loan and building equity in your home - but what can you do with all that equity? Equity can be used for a number of different things, such as going towards the down payment on your next home, funding your retirement, or taking out a reverse mortgage. A reverse mortgage (also called a "second mortgage" or a "home equity loan") is a loan you take out that allows you turn your home equity into cash you can use for home improvements, buying land around your home, or any number of other possibilities. 

Reverse mortgages tend to be varied and complex. You should talk to a mortgage lender to get all the information you need before officially deciding whether or not to take out a second mortgage, but the team at Arrowhead Title, Inc. is here to help you get the ball rolling.

 Reverse Mortgage FAQ (Part 1)

1. How Do I Qualify For A Reverse Mortgage?
In order to be eligible for a reverse mortgage, you have to meet certain qualifications:
  • You must be at least 62 years old
  • You must own your home
  • You must have enough equity in your house to pay off any outstanding balances
  • Your home must be occupied as your primary residence
2. Do I Have To Get Counseling Before Getting A Reverse Mortgage?
Yes. Counseling is required to protect borrowers from receiving incorrect information about reverse mortgages. Before they can close the loan, the lender must be in receipt of the counseling certificate. Your loan officer or your local HUD office will be able to direct you to a local reverse mortgage counselor.

3. How Much Money Can I Get?
The amount of money you can get in a reverse mortgage will depend on several different factors, such as how old you were at the time of closing, how much your house is worth, the total amount of liens you have against your property and what the current interest rates are. The type of second mortgage you get and the payment options you choose can also affect the amount of money you will receive.

4. How Do I Receive My Money?
You have a lot of different options. One option is to receive your money as a lump sum (this is typically an attractive option for individuals choosing to put the money towards a big purchase). Other options would be to receive your money in monthly payments or as a line of credit.

5. Do I Get Taxed On The Money I Receive From My Reverse Mortgage?
Good news! The equity in your home is considered money you already have, not additional income. As a result, the funds you receive from your reverse mortgage are all tax-free.

6. What Costs Are Associated With A Reverse Mortgage?
Believe it or not, the costs associated with taking out a second mortgage are actually very similar to those of a standard mortgage loan. For example, you can expect to have to pay a loan origination fee, appraisal fee, flood certification fee, title and settlement fee, document preparation fee, and other standard closing costs.

7. Do I have To Pay Any Fees To The Reverse Mortgage Lender During The Course Of My Loan?
Originally, reverse mortgages were created so that borrowers would not have to pay fees during the course of the loan. However, a monthly servicing fee will most likely be deducted from your account every month during the life of your loan.

 But Wait, There's More!
Be sure to check out our blog next week for the answers to seven more frequently asked questions about reverse mortgages.

Taking Out A Mortgage In The Near Future?
Almost every mortgage requires some form of title service. Whether you're in the need of a title report, a title search, or any of our other title services at the Lake of the Ozarks, we hope you will keep Arrowhead Title in mind! We look forward to working with you in the future.

 Contact Arrowhead Title, Inc. to begin your title insurance process today!

The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!

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750 Bagnell Dam Blvd Suite B
Lake Ozark, MO 6504
Location: Lake Ozark, MO 65049, USA

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