Reverse Mortgages Q & A
What is a Reverse Mortgage?
A reverse mortgage is a special type of loan, which enables you to tap into the equity in your home and receive cash, a tax-free* monthly income, and/or a line of credit. There are no income or credit qualifications and there are no monthly payments to make. The loan is not repaid until you permanently leave your home. Topdot Mortgage’s reverse mortgages are backed by the U.S. Government or major financial institutions.
How Do I Qualify For A Reverse Mortgage?
A reverse mortgage is easy to obtain, provided that:
• You are at least 62 years of age or older.
• Your home is or is to be occupied as your primary residence.
• You have substantial equity in your home (proceeds of the reverse mortgage can be used to pay off existing liens or mortgages)..
Please visit our pre-qualification calculator to see if you qualify!
What Can I Do With the Money?
You can use the money you receive from your reverse mortgage in any way you choose:
• Supplement your income
• Home improvements
• Purchase of a new home
• Pay off a current mortgage
• Medical expenses
• Pay off debt
• Buy a new car
• Travel
• College tuition or gifts to family
The possibilities are endless! For more information, refer to the “Which mortgage is right for me?” page.
How Much Money Can I Receive?
The amount of money you can receive from a reverse mortgage is determined by your home value, the number and age of the homeowner(s) and the current interest rate. A representative will assist you in evaluating your options and calculate the maximum amount of money that will be available to you.
How Do I Receive the Money?
With a reverse mortgage, there are generally five payment plan options. Options vary by the reverse mortgage program chosen.
They include:
• Monthly Cash Advance: Receive equal monthly payments for as long as you occupy your home as your principal residence. (HECM and Home Keeper programs only)
• Line of Credit: Draw cash from your reverse mortgage whenever and in whatever amount you choose, up to the available limit. Only the funds drawn from the line of credit are subject to interest charges - the unused portion of your line of credit is not charged interest. (Flex Plan, HECM and Home Keeper)
• Lump Sum: You can receive all of your money in a lump sum upon the closing of your reverse mortgage. (Flex Plan, HECM and Home Keeper)
• Modified Tenure: Set aside a portion of the loan proceeds as a line of credit, in addition to monthly payments. (HECM and Home Keeper)
• Term: Receive equal monthly payments for a fixed period of time that you select, for example 5 or 10 years. (HECM only)
• Modified Tenure: Set aside a portion of the loan proceeds as a line of credit, in addition to monthly payments for a fixed period of time. (HECM only)
You can change payment plans as frequently as you wish for a nominal fee.
How is Interest Charged on a Reverse Mortgage?
The initial interest rate is determined at loan closing and may adjust monthly or annually. You are only charged interest on the loan balance, which consists of the cash you have received, financed closing costs (if applicable), and the interest that has accrued.
What Costs are Involved with a Reverse Mortgage?
As with a conventional mortgage loan, there are fees and closing costs involved with a reverse mortgage. Generally, these fees can be financed into the loan, and typically include the cost of the appraisal, title insurance, loan origination, and escrow and recording fees. In addition, depending upon your initial loan amount, an Independence Plan may provide you with a credit toward your third party closing costs.
A Topdot Mortgage Reverse Mortgage Consultant will be happy to provide you with a good faith estimate of the costs involved.
When Does the Reverse Mortgage Need to be Repaid?
The reverse mortgage becomes due and payable when the borrower permanently leaves the home - whether they move, sell or pass away. Reverse mortgages are typically repaid from the proceeds of the sale of the home, with any remaining equity staying with the homeowner or their heirs. If a spouse passes away, the surviving spouse continues to receive the full benefits of the reverse mortgage, with no repayment due until they decide to permanently leave the home.
A reverse mortgage may also be repaid by refinancing the reverse mortgage balance or by using other assets.
Do I Still Own My Home?
Absolutely. You retain full ownership of your home when you obtain a reverse mortgage. As with any mortgage, the lender has a lien against your property.
What is a Counseling Certificate?
When you decide to go through with a reverse mortgage you are required to meet with a reverse mortgage counselor. This free counseling session will help you determine whether a reverse mortgage is right for you. The counseling session can be done either in person or on the telephone, and family or trusted friends are encouraged to participate. Your loan officer can provide you with a list of qualified counselors in your area.
Why Should I Choose Topdot Mortgage as my Reverse Mortgage Lender?
Our company’s commitment to customer service and affordable housing solutions has earned the company national recognition as a top lender and is what enables us to offer unique products, such as the reverse mortgage.
Topdot Mortgage reverse mortgage specialists are here to help. Please contact us and one of our representatives will be happy to discuss the program in greater detail.
Topdot Mortgage reverse mortgage specialists are here to help. Please contact us and one of our representatives will be happy to discuss the program in greater detail.
What Documents do I Need to Complete a Reverse Mortgage?
Please see our Application Checklist for a detailed listing of what documentation will be required.
What is the HECM?
The HECM is a Home Equity Conversion Mortgage backed by the U.S. government. The HECM provides borrowers with additional opportunities for financing by offering reduced margins giving the borrower more upfront cash. Reduced margin loans can provide a higher percentage of available equity and reduced life of loan accrued interest, giving seniors greater access to home equity.
What is the Flex Plan?
Designed for owners of higher value homes, The Flex Plan is our proprietary jumbo loan. This product can provide a higher percentage of available home equity to borrowers, exceeding the federal loan limit placed on reverse mortgages. The Flex Plan functions similarly to the FHA Home Equity Conversion Mortgage (HECM) and Fannie Mae Home Keeper reverse mortgage programs, but is funded by a third-party lender.
Unique to the marketplace, in many cases The Flex Plan provides senior borrowers with more available cash than any other plan currently on the market. Additionally, it allows for reduced closing costs with fewer restrictions than similar products currently offered.
Is the Flex Plan right for Me?
The Flex Plan couples Topdot Mortgage’s renowned service with the power of a jumbo loan product. The Flex Plan places virtually no limit on the value of the home and amount of the loan available. This results in greater access to home equity and provides additional accessible cash to the borrower. Eligibility requirements are similar to the FHA Home Equity Conversion Mortgage and Fannie Mae Home Keeper reverse mortgage products. All fees may be financed into the loan.
This loan best suits homeowners with an appraised value of $400,000 or higher.
Why should I get a Reverse Mortgage Instead of a Home Equity Line of Credit?
A reverse mortgage allows borrowers to draw from their equity without making monthly payments. Many seniors would like to pay off debt, supplement income or have more discretionary cash without increasing their monthly burden. A full reverse mortgage repayment occurs when the borrower moves, sells, or passes away.
There are no income or credit requirements for a reverse mortgage. Only age, number of borrowers, amount of home equity and the current interest rate are used in determining whether a borrower qualifies for all of our reverse mortgage programs.
