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The Plain-English Guide to Reverse Mortgages:What is a reverse mortgage?A reverse mortgage is a special type of loan that allows a homeowner to convert aportion of the equity in their home to eliminate mortgage payments and even gaintax-free income without losing title to your home. The equity in your home thathas built up over the years of mortgage payments and appreciation can be paid toyou. But unlike a traditional home equity loan or second mortgage, no repaymentis required until the borrower(s) no longer uses the home as their principalresidence. Reverse mortgages offered by Park Place Reverse are FHA-insured andguaranteed.Can I qualify for a HUD reverse mortgage?To be eligible for a HUD reverse mortgage, HUD’s Federal Housing Administration(FHA) requires that the borrower is a homeowner, 62 years of age or older; ownstheir home outright or has a low mortgage balance that can be paid off at theclosing with the proceeds from the reverse mortgage; and must live in the home.It is required that the home owner receive information from HUD-approvedcounseling sources prior to completing the loan.What is the difference between a reverse mortgage and a bank home equity loan?With a home equity loan you make monthly payments until the loan is repaid (inaddition to your mortgage payments).In a reverse mortgage no payments must be made as long as the house remains theprincipal residence. As with all homeowners, real estate taxes and insurance mustbe paid, there is absolutely no foreclosure or forced vacancy because no mortgagepayment is required.Will a reverse mortgage affect my public benefits?No. A reverse mortgage will not affect Social Security or Medicare.Is the money tax-free?Yes. The proceeds are not considered income by the IRS.Am I qualified for a reverse mortgage if I have a existing loan?Yes. The existing loan will be paid off during the closing.
 
Will I still have an estate that I can leave to my heirs?When you sell your house or the last person on the title has passed, your estatewill repay the cash you received from the reverse mortgage, plus interest and feesto the lender.The remaining equity in your home, if any, belongs to you or your heirs.Reverse mortgages are “non-recourse” loans, which means that the lender does nothave recourse to anything other than the home. Not income, not any other assets,not your heirs assets.How much money can I get from my home?The amount you can borrow depends on your age, the current Expected Interest Rate,other loan fees and the appraised value of your home or FHA’s mortgage limits foryour area, whichever is less. Generally, the more valuable your home is, theolder you are, the lower the Expected Interest Rate, the more you can borrow.What I do with the money I receive from a reverse mortgage?The good news is you can do anything you want with the money; after all it’s yourmoney. Many people take vacations, buy a new car, and help the kids or grandkidswithcollege or their first home. Many people put some in a line of credit that theywill use in the future for in-home care or other health care costs.How do I receive my payments?Tenure- Equal monthly payments as long as at least one borrower continues to livein your house as a principal residence.Pros-Ensures a monthly income as long as you live regardless of interestrates, home value, the economy or anything else.Cons-The amount you receive is based on the number of years to age 100,which means the younger you are, the less you will receive over the lifetime ofthe loan.Term-Equal monthly payments for a fixed period of months selected.Pros-You can receive the maximum amount monthly for a given period of time.Con- When the term is complete, the money is gone and you will receive nomore funds from the reverse mortgage.Line of Credit - A credit line that you can draw on whenever you wish. This growsat about 6% annually.Pros-Allows you to save money for emergencies or future purchases. Theborrowing capacity of a credit line continues to grow while it sits in a Line ofCredit account at no cost to you. Lump Sum- Obtain a lump sum payment of some amount .
 
Pros-Obtain cash immediately for large item purchases, travel, homeimprovements or anything you desire.Cons-The amount you take out as a lump sum will reduce the amount youreceive every month if a Tenure payment is selected.Combination- Do a combination of all the options.You could take out some amount as a lump sum for home improvements, travelor large item purchases, put some into a Line of Credit for possible future use,or the remaining as a Tenure monthly payment for life.“Not Against Your Home”Borrowing against your home usually means paying back a loan every month. But ifyou lose your job or your income drops, you could miss some payments and lose yourhome to foreclosure. That’s why it’s generally not a good idea to borrow againstyour home unless it’s for a very basic purpose. You want to avoid jeopardizingyour home ownership.This caution, however does not apply to reverse mortgages because no monthlyrepayment is required. As long as you pay your taxes and insurance you cannotlose your home.What should I look for in a reverse mortgage company?Here are some important questions to ask when evaluating reverse mortgagecompanies:Does the company require you to give them money during the application process?This is not required and it is recommended that if a company requests moneyupfront, you should consider not doing business with them.Does the company specialize in reverse mortgages or do they have multiple productsto sell? A reverse mortgage is a very different product compared with a forwardmortgage and requires special expertise. Park Place Reverse Mortgage is committedto “Making a Difference For Seniors” by helping them achieve their goals. As ourname implies, we dedicate 100% of our time providing reverse mortgages to ourclients.Park Place Reverse Mortgage1176 Grimes Bridge RoadSuite 400Roswell, GA. 30075
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