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Get the Facts on Reverse Mortgages

If you are a homeowner and at least 62 years of age, here are some important things to consider. Knowing the facts may help you better understand some of the most common misconceptions about reverse mortgage loans:

A reverse mortgage allows you to convert some of your home equity into accessible tax-free loan proceeds. Borrower must continue to pay property taxes, homeowner's insurance and maintenance costs.

A reverse mortgage enables you to receive payments instead of making monthly mortgage payments.

You can receive those funds in a plan that fits your needs: Lump sum, monthly installments, a line of credit to draw from as needed or any combination of the three. And you can change your payment plan at any time throughout the life of the loan unless you take lump sum.

You can use your reverse mortgage proceeds any way you choose; including paying off your existing mortgage (all existing liens must be paid off at closing), supplementing monthly living expenses, paying for home repairs or renovations, covering medical costs or reducing credit card debt.

You continue to own and live in your home as long as all program requirements are met.

Program requirements include, but are not limited to, at least one homeowner living in the home as his or her primary residence, keeping taxes and insurance payments current and maintaining the home to FHA standards.

If you have a remaining mortgage balance, you may still qualify for a reverse mortgage, but the remaining balance must be paid off with the reverse mortgage proceeds.

A reverse mortgage will not affect Social Security or Medicare benefits. A reverse mortgage may impact certain government benefits such as SSI and Medicaid.

A reverse mortgage could even help you purchase a new home better suited to your needs.

Consult a tax advisor.

Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling from a HUD-approved agency. Family members and financial advisors are also strongly encouraged to participate in these informative sessions. Call for more detailed program information.

Loan proceeds are not considered income and will not affect Social Security or Medicare benefits. your reverse mortgage proceeds may affect your eligibility for other programs. Consult either a local program office or your attorney to determine how, or if, monthly reverse mortgage payments might affect your specific situation.

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