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Take the Quiz
How much do you really know about reverse mortgages? So, think you know everything there is to know about how reverse mortgages work? Look past the myths and misconceptions about reverse mortgages and discover the truth with this short 10-question quiz. Decide whether the following statements are true or false.
number The bank will own my home.
True
False

FALSE - YOU'RE RIGHT!

This is one of the most common misconceptions about reverse mortgages. But just like any mortgage or home equity loan, the lender has a security interest in your home, while you continue to own your home, with your name on the title. Of course, you must meet your loan obligations: keeping current with property taxes, homeowner's insurance and maintenance.
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number637723128916705372 I probably won't qualify because I already have a mortgage.
True
False

FALSE - YOU'RE RIGHT!

You do need to have a minimum amount of equity in your home in order to qualify, but proceeds from your reverse mortgage can and would first be used to pay off any existing mortgage(s).
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number637723129895768511 I may end up owing more than my home is worth.
True
False

FALSE - YOU'RE RIGHT!

A reverse mortgage is a non-recourse loan. You (or your heirs) are not liable for any amount that exceeds the value of your home when the loan is repaid.
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number637723138357713049 I will not be able to leave my home to my heirs.
True
False

FALSE - YOU'RE RIGHT!

Your heirs will still inherit your home, but they will have to pay back the loan balance if they want to keep the home; this includes the amount of funds you used plus accrued interest and fees. Or they can sell the home to repay the loan. Once it is repaid, they receive any remaining equity—just like a traditional mortgage or home equity loan.
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number637723138530383899 Reverse mortgages are a last resort.
True
False

FALSE - YOU'RE RIGHT!

Many savvy homeowners use a reverse mortgage strategically, for example, as a safety net in case of emergencies. In recent years, a number of product advances have made reverse mortgages more attractive, and academic researchers at respected universities have developed effective strategies for using a reverse mortgage as part of an overall retirement plan. Today, financial advisors are increasingly viewing them as an important option to be seriously considered.
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number637723139177670234 Most reverse mortgages are government-insured.
True
False

TRUE - YOU'RE RIGHT!

The most popular type of reverse mortgage loans today is a Home Equity Conversion Mortgage. Also known as HECMs, they are insured by the Federal Housing Administration (FHA).*
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number637723139593819208 Just like a traditional mortgage or Home Equity Line of Credit (HELOC), monthly payments are required on a reverse mortgage loan.
True
False

FALSE - YOU'RE RIGHT!

No monthly payments are required for as long as you live in the home. As with any mortgage, you must meet your loan obligations, keeping current with property taxes and insurance, and keeping your home in good condition.
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number637723140418661536 Reverse mortgages are expensive and have a lot of upfront, out-of-pocket costs.
True
False

FALSE - YOU'RE RIGHT!

With the exception of a fee for government-required counseling, most of the fees associated with a reverse mortgage can be financed with your loan, so there is no immediate out-of-pocket cost. The costs are added to the loan amount (“principal”) and paid along with the accrued interest when the loan becomes due. Depending on the loan option you choose, these fees may include an origination fee, closing costs, a mortgage insurance premium (required for HECM loans) and a monthly servicing fee.
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number637723140610137426 Reverse mortgage proceeds can help my overall investment strategy.
True
False

TRUE - YOU'RE RIGHT!

By leveraging the equity in your home, you can delay having to tap into interest-bearing assets such as stocks. From a retirement planning perspective, prominent researchers agree that incorporating home equity can yield better investment portfolio results because it introduces an asset that is otherwise ignored.†
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number637723140815295917 Anyone can get a reverse mortgage.
True
False

FALSE - YOU'RE RIGHT!

Typically, to qualify for a HECM reverse mortgage, you must:
• Be age 62 or older (at least one spouse needs to be age 62 to qualify)‡
• Own and have sufficient equity in your home
• Live in the home as your primary residence
- Houses and condos that meet FHA* or Equity Elite§ requirements
- Homes with existing mortgages may also qualify
A financial assessment is conducted to make sure you have enough money to pay ongoing costs such as property taxes over the life of the loan. In addition, counseling is required to ensure the consumer understands the loan, is not being pressured by their family or the lender and they are cognitively ok to proceed with transaction
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A reverse mortgage loan can be an effective financial planning strategy for homeowners age and older — but it’s not right for everybody. By doing your homework, you’ll better understand the pros and cons and can determine if a reverse mortgage is the best way to supplement your retirement income and live the lifestyle you’ve envisioned.

*This material has not been reviewed, approved or issued by HUD, FHA or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD/FHA or any other government agency.
†Consult a financial professional to determine the potential financial implications of obtaining a reverse mortgage loan.
‡Not applicable in all states; some states may impose a higher age requirement. Visit www.reversefunding.com/equity-elite for details.

§Equity Elite Reverse Mortgage (“Equity Elite”) is Reverse Mortgage Funding LLC’s proprietary loan program, and it is not affiliated with the Home Equity Conversion Mortgage (HECM) loan program, which is insured by FHA. Equity Elite is available to qualified borrowers who also may be eligible for FHA’s HECM program or are seeking loan proceeds that are higher than FHA’s HECM program limit. Equity Elite currently is available only for eligible properties in select states. Please contact your loan originator to see if it is currently available in your state.

Upon a maturity event, any non-borrowing individuals with an ownership interest in the property, including non-borrowing spouses, will have a short period of time (for example, 30 days from a due and payable letter or an alternate time specified by the loan servicer if extensions are available under the circumstances) to purchase the property from the estate or, if the non-borrower inherits the property, pay the loan in full using any sources of funds available to them. Any non-borrowing individual, including a non-borrowing spouse, should have a plan to pay off an Equity Elite reverse mortgage upon the borrower’s death or any other maturity event. If the non-borrower is unwilling or unable to purchase the property or pay the loan in full, there is no protection for the non-borrower (including a non-borrower spouse) to maintain an interest in the home or to continue residing in the home past the maturity event and the non-borrower may be evicted upon foreclosure. The FHA HECM program has protections in place for certain non-borrowing parties, so a reverse mortgage applicant with certain non-borrowing parties should strongly consider an FHA-insured HECM loan (see HECM guidelines or ask an RMF representative for details). Under the Equity Elite reverse mortgage loan program, a maturity and/or default event occurs when the last surviving borrower no longer lives in the home as his or her primary residence for at least 12 months, the property charges (including taxes, insurance, or any other property charges) are not paid, required repairs are not completed or the property is not maintained, or any other maturity and/or default event, as specified in the Security Instrument, occurs.