This is the third in a three part series of frequently asked questions about Reverse Mortgage.  You can find Part 1 here and Part 2 here.  If you have questions that are not currently listed, please don’t hesitate to contact me directly.

Will I Lose My Government Assistance If I Get a Reverse Mortgage?

A reverse mortgage does not affect regular Social Security or Medicare benefits. However, if you are on Medicaid or other public assistance, any reverse mortgage proceeds you receive will need to be reported or they may affect your eligibility. Reverse mortgage funds that you retain would be considered an asset, just as other bank funds.

What is a Reverse Mortgage Appraisal?

A home appraisal by an FHA approved appraiser is required for every reverse mortgage loan.  Once your reverse mortgage lender has received your application, you will be contacted by an appraiser to schedule a time to conduct the appraisal.  The appraisal will consist of an inspection, where the appraiser will walk through your home and possibly take photographs.  Once the walk-through is completed, research will be done to determine your home’s worth based on various factors, including comparable home sales in your area.  After the research has been done, an appraisal report will be generated which will include all of the factors that went into determining your home’s appraised value.  For more details regarding your reverse mortgage appraisal, read my article focused specifically on the appraisal process here.

How Do I Spot a Reverse Mortgage Scam?

Unfortunately con-artists occasionally prey on older individuals through reverse mortgage scams, but there are several ways to spot such activity.  Be skeptical of lenders who solicit through means such as television, door-to-door, churches or other community centers, direct mailers, or other extensive advertisements.  Asking for large amounts of money up front is a very clear indicator.  Anything required beyond a routine appraisal deposit of approx $300 is cause for concern.  Steer clear of reverse mortgages that are marketed as “Foreclosure Assistance”.  A high pressure salesperson is a red-flag, as it is important to clearly understand what you are signing and to have any questions thoroughly answered.  Working with a reputable lender is critical when making such a major decision as obtaining a reverse mortgage.  Learn more about reverse mortgage scams here.

What Happens if the Borrower Moves Into a Senior Care Facility or Something Similar?

A reverse mortgage becomes due and payable when the last borrower moves out of his or her home permanently. For instance, moving into a senior care facility, selling the home, passing away or moving in with adult children.  In the case of married couples, if both are on the loan, and only one spouse is no longer permanently in the home, the loan will continue until the remaining spouse leaves.

What Happens to a Reverse Mortgage After the Owners Pass?

When the last homeowner passes, the home will transfer into the estate or a specific person according  to the wishes expressed in the homeowner’s will.  At this time there are three main options: pay off the remainder of the loan, obtain a conventional loan, or sell the home.  For more extensive details about each of these options, read this article on my blog.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, and Front Range areas of Colorado.  Click here to contact Jan and learn if reverse mortgage is right for you.