1. Does the bank own the house in a reverse mortgage?

A reverse mortgage does not mean that the homeowner is selling the home to the bank. Lenders add a lien onto the title for the amount that is borrowed where the homeowners keep the title on their name. By doing so the lender guarantees that the loan will be eventually getting paid back.

2. Do I need to take out money from my pocket for expenses?

You would only need to pay the cost of the counseling and the appraisal, in many cases if requested the lenders would pay for the appraisal and finance the cost into the loan.

3. How is the money paid out in a reverse mortgage?

Firstly the lender would find out if there is any debt remaining on the original mortgage and pay it off, then the loan closing cost and the rest is up you if you want to take the money in lump sum or to choose monthly payments or if you opt for line of credit, paying the interest only for the amount you use.

4. How much money can I get?

In Reverse Mortgage the amount of funds you are eligible depends on the age of the borrower, the appraised value of the home, current interest rate. In general the older the homeowner and more the value of the home, more money you can get.

5. Will I loose my government assistance if I get a reverse mortgage?

In general the reverse mortgage does not affect regular social security or Medicare benefits. But if you are on Medicare any cash that you receive from the reverse mortgage should be used immediately. The money that you receive from the reverse mortgage may be considered as your asset and may affect your Medicare.

6. Why is counseling necessary?

Concerning a third party before you apply for a reverse mortgage, homeowner concerns a third party who can help the homeowner to reviewing the available programs and understanding the Reverse Mortgage before applying for a Reverse Mortgage.

7. How does the interest work on a reverse mortgage?

In Reverse Mortgage you are only charged interest for the proceeds that you received.

8. Under what circumstances should I not consider a reverse mortgage?

If you intend to leave your home in the next 3-4 years, you would find better options as the upfront costs associated with a reverse mortgage should also be considered. Or if you would like to leave your property to your children you can consider other options available because in many cases the home is sold to pay back the reverse mortgage.