Crown Reverse Mortgage FAQs
Quick answers to frequently asked questions about reverse mortgages.
“A big thank you to Brian! I first reached out to him about registering my account online. I had some problems with the process. Well, a few days later the problem was solved. Brian helped me access my loan information and request a draw. What a relief! The whole process took less than a week. Seeing someone actually follow through is great. Truly excellent service.”
“A reverse mortgage sounds like an interesting idea, but I have so many questions... I just don’t know where to start”.
Actually, right here is a great place to start.
We’ve gathered the questions people ask most often about reverse mortgages, and answered them for you below.
We've also included helpful links for you to access more detailed information. Just click on a question below to reveal the answer.
Frequently Asked Questions
A reverse mortgage is a loan that allows you to convert your home equity into cash.
Have you ever heard about any of these 5 things:
- HECM Mortgage
- Home Equity Conversion Mortgage
- HECM Reverse Mortgage
- HECM Loan
- Reverse Mortgage
You see, it’s the same thing. This is the loan program insured by FHA. It was designed to let you (the howeowner over the age of 62) tap into your home equity and get cash to use as you wish.
It’s important to understand that this is not the same as what’s known as a traditional forward mortgage.
In a traditional forward mortgage, you must begin repaying the loan right away.
With a reverse mortgage, on the other hand, you don’t have to repay the funds you receive unless/until:
- The final borrower of the loan leaves the home (no longer lives there)
- You fail to pay your property taxes, insurance fees, home maintenance payments, or the stated terms of the loan.
With a reverse mortgage, there are zero monthly mortgage payments required. Looking for more information on the basic benefits of a reverse mortgage? Visit our Reverse Mortgage 101 page now.
There are several different variables at play that determine just how much of the home value you’ll be able to access. For instance, what’s known as the “principal limit”. This is your borrowing limit.
Other factors include:
- Your current age
- The value of your home (as determined by a fair appraisal)
- The amount of outstanding loans against your house
- Current interest rates
To get a better idea of how much cash you could receive, call us, or check out our Free Quote Calculator for a customized estimate.
You, the homeowner, will always maintain the title and ownership of your home. In this way, it works exactly like a traditional mortgage.
Get the important facts and read more about other common reverse mortgage myths and misconceptions in our “Mythbusters” section here.
The important thing to remember it that a reverse mortgage does not come with any monthly mortgage bills.
You see, the whole process of repayment only begins when/if:
- You’re not living in the home anymore
- You fail to meet the terms of your loan
Want to read more about the loan repayment process? Click here.
The short answer is: yes.
Do you have an existing mortgage? If the answer is yes, you can use the proceeds from a reverse mortgage to pay off your existing mortgage. Isn’t that great?
When there are no monthly mortgage bills to be paid, you can just eliminate that expense.
The result is that you’ll keep more money. This is money you can use freely. Tell me, what would you use the extra cash for?
With a reverse mortgage, your heirs can inherit the house, just as they would with any other mortgage.
When the loan becomes due, they can decide how to repay the loan balance.
Most often, the home is sold and proceeds are used to repay the lender. If there’s any money left over, it goes to your estate.
And unlike a traditional mortgage, a reverse mortgage has non-recourse protection. This means that you or your heirs will never owe more than the home’s value.
You can read more on what adult children need to know here.
Your reverse mortgage proceeds can be received in a variety of ways:
- As a one-time, tax-free deposit*
- As tax-free (steady) monthly payments*
- As a line of credit*
- As a “financial safety net” to use for your future needs*
*Or, any requested combination of these ways.
In this sense, a reverse mortgage is similar to a traditional mortgage. Your interest rate will determine the amount of interest you’ll pay on your loan.
When it comes to a reverse mortgage, there are two products: fixed rate and adjustable-rate (known as “ARMs”).
Fixed-rate means that your interest rate will remain the same for the life of your loan. The downside is that it demands a lump-sum disbursement at the time of closing.
ARM, on the other hand, means that payments can be received in four ways:
- As a single lump-sum disbursement
- As a line of credit
Your adjustable rate (annually) includes what’s known as a periodical change. This can be up to 2%, with a lifetime cap of 5% over the start rate.
These interest rates offer flexibility (with the multiple payment options stated above). These interest rates are generally lower than those of fixed-rate mortgages.
Do you want to see what you can qualify for, or get an up-to-the-minute rate? Call us right away.
No, they are non-taxable.
You can even avoid taxable withdrawals from your 401(k), thanks to a reverse mortgage. Same goes for other retirement plans.
All you have to do is follow these two steps:
- Get a reverse mortgage by calling us today.
- Replace your 401(k) or retirement plan money with the (100% tax-free) proceeds from your reverse mortgage*.
Yes. You have the freedom to make payments as often as it suits you, despite the fact that a reverse mortgage does not require monthly payments.
An important difference and benefit here is that there are no prepayment penalties with reverse mortgages, unlike other types of loans.
Have you decided that a reverse mortgage is right for you, or are you considering it?
All borrowers are required to meet with a FHA-approved counselor. This can happen either by phone or in person.
This is a crucial step (before your application is completed). It certifies your understanding of how a reverse mortgage works.
Plus, it’s good to know that your questions have been answered by a qualified third party when it comes to:
- The financial implications
- The process
- Your options
A great next step it to read more about counseling here.
Getting a reverse mortgage can take some time. It involves several important steps, just like if you were applying for a traditional (forward) mortgage.
But, one of our trusted experts can help you every step of the way. For more details, read our section on what to expect.
You can actually use the cash from a reverse mortgage with complete freedom. No limits.
What are your specific financial goals during retirement? Click here for some common ways of how you can use your reverse mortgage during your golden years.
This is where the “HECM mortgage program” comes in.
In this program, you’re required to have a meeting with a counselor.
Don’t worry, your counselor will be government-approved and independent.
“But why is this mandatory?”
To make sure that you understand the program and its benefits, plus your responsibilities as a borrower.
*You need to consult a financial advisor, as well as appropriate government agencies, for any effect on your taxes or government benefits.
We’re committed to helping you make informed decisions.
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Use this form to submit it, and help us make this page an even better platform for curious homeowners like you.
Do you have a specific question about reverse mortgages?
Wondering how a HECM reverse mortgage will impact your personal financial situation?
Contact us right now to speak with a Longbridge expert. Our toll free number is (805)-434-5226.