How do the monies from a reverse mortgage affect state-run benefit programs such as Medicaid and Social Supplemental Income (S.S.l.)?

If you are receiving state benefits, you should discuss your plans to obtain a reverse mortgage with a representative of that agency and your financial advisor to determine if it would have an impact on these benefits. In most cases, the proceeds from a reverse mortgage, if managed properly, will not affect eligibility for these programs.

Does the lender take the house?

A reverse mortgage is merely a lien against the property. The title remains in the name of the borrower and the lender is repaid the loan balance or the current home value, whichever is less, upon the occurrence of a maturity event.

Do heirs or the borrower have to sell the property to repay the loan?

No. Repayment can be accomplished by refinancing the existing reverse mortgage with a traditional mortgage loan, or using other available sources to repay the loan. (Note: your heir(s) have up to twelve months to determine the status of the home, either as a refinanced property kept by an heir or sold outright with the balance from the sales proceeds distributed according to your estate wishes.)

When does the loan become due and payable?

Unless a material default occurs, the loan is due and payable only when the borrower sells the property, no longer occupies the property as his/her primary residence or passes away. In the case of co-borrowers, it is the last borrower to move out or pass away that triggers repayment. Until these events take place, you may live in the home and make no monthly mortgage payments to the lender.

How long does it take for the reverse mortgage loan paperwork to be completed? When can I expect my first payment(s)?

Typical application processing has taken up to 60 days. Dependent upon the individual criteria involved in the application, it may be less than 60 days.  Upon closing of the loan, the first payment is typically received within three to four weeks of closing date.

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