Questions & Answers

What is a reverse mortgage?

A Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage, is a Federal Housing Administration (FHA) insured loan that enables you to access a portion of your home's equity to obtain tax-free funds without having to make monthly mortgage payments.

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Why is it called a reverse mortgage?

You receive money and make no payments.  A forward mortgage requires monthly payments.

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How does a reverse mortgage differ from a home equity loan?

Both a reverse mortgage and a home equity loan use the equity you have built up in your home to provide you with readily available cash. However, a reverse mortgage requires no monthly payments, and a home equity loan does..

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What are the advantages of a reverse mortgage?

East Bay Reverse MortgageThere are many.  Here are a few of the most significant

Remain independent and stay in your home. A reverse mortgage allows you to remain in your home and retain home ownership.

No monthly mortgage payments.  You need not pay back the mortgage loan or make any monthly payments until you permanently move out of the home.

Tax-free money.  Because the money you receive from a reverse mortgage is not considered income, it is considered tax free and will not affect your social security or Medicare benefits.

Freedom and flexibility.  The money you get from a reverse mortgage is yours to use in any way you choose.

I have heard that with a reverse mortgage the lender would own my home.  Is this true?

It is absolutely false.  The borrowers always retain title to the property.  The reverse mortgage is merely extending a loan to the borrower.

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How does the Loan Processing work?

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Can I owe more than my home is worth?

East Bay Reverse MortgageA reverse mortgage is a “non-recourse” loan, which means that you, your heir, or your estate cannot be required to repay more than the appraised market value of the home at the maturity of the loan. If the loan balance exceeds the value of the home, you, your heirs, or your estate will only be obligated to repay an amount up to the current appraised value of the property.

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What is owed when a reverse mortgage loan is repaid?

When the last surviving spouse permanently moves out of the home or passes away, the reverse mortgage loan becomes due.  The reverse mortgage principal and interest is repaid from the proceeds of the sale of the home or through a refinance to a traditional “forward mortgage”.

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