BY CATHY JETT
Gary Onks answered more than 30 questions about what reverse mortgages are and how they work during Tuesday's Money Talk$.
He is the regional branch manager of Reverse Mortgage USA in Spotsylvania County. Reverse mortgages are loans for people over the age of 62 that let them tap the equity in their homes without having to repay the money until they, or their estate, sell the house.
Below are some of the highlights from the Web chat. A full transcript is available at fredericksburg .com/blogs/whatsin store.
From "ck" in Spotsylvania: I currently have a reverse mortgage, but the value of my house has fallen below the balance of the mortgage. If I sell the house as a short sale, am I able to purchase another home and get a new reverse mortgage without having to pay the bank the difference of the short sale?
Yes, the beauty of a reverse mortgage is that if the home sells for less than what you owe, FHA will pay the difference to the bank. You have no further obligation on that loan and can get another reverse loan once the first one has been satisfied.
From "GC" in Culpeper: I'm still paying off a $30,000 home equity line of credit on a $350,000 house. Can I take out a reverse mortgage, too? I'd like to use part of it to pay off the home equity loan. The house is paid for, otherwise.
Yes, you qualify for a reverse mortgage. The amount available for a loan is between 50 and 78 percent of the value of a home based on your age. So you would be eligible for at least $175,000 from a reverse mortgage.
From "SF" in Fredericksburg: My late husband and I owned our home free and clear. I remarried several years after his death, and my new husband and I live in my house. What would happen to him if I died first? Would he have to move out if I took out a reverse mortgage? The house is in my name.
If the house is in both names, then the loan would be in both names and the surviving spouse could continue to live in the home and enjoy the benefits of a reverse mortgage.
From "pv" in Spotsylvania: Who decides what the loan value of a home is when a person decides to get a reverse mortgage?
That is controlled by HUD and FHA. We take the value of your home plus your age and run it through their parameters to get the amount that would be available to you. As I mentioned in a previous question, that would be between 50 and 78 percent of the market value.
From "RC" in Stafford: What are the tax implications of a reverse mortgage for the recipient? How is the income taxed?
Money from a reverse mortgage is not considered income so there are no tax issues. It is cash to you from your home just like a regular home equity loan. You use the money any way you want with no strings attached.
From "ho" in Fredericksburg: How much money should someone with a $300,000 home expect to get out of a reverse mortgage loan yearly if that person wanted to make the payments last for 10 years?
As I said earlier that is based on your age and would be between 50 and 78 percent of the value.
From "AR" in Fredericksburg: If I get a reverse mortgage on my home, who pays the property tax/homeowners insurance/HOA dues/etc.? Do I need to continue paying those, or does the mortgage company pay them out of escrow, as with a conventional mortgage?
Normally you continue to pay those since it is your home and stays in your name. If you want the bank to pay these for you, that can be arranged.
From "RT" in Fredericksburg: How much equity do you have to have in your home to qualify for a reverse mortgage?
At least 50 percent of the market value.
From "BG" in Stafford: I'm considering getting a reverse mortgage, but not sure how to go about it. Do I talk to a bank, a mortgage broker or do I need an estate attorney? Also, do I need to make any changes in my will?
You should talk to companies like mine that specialize in reverse mortgages, they are all we do. Most local banks do not offer this product because they can't afford to wait the average of eight to 10 years to be paid on the loan and that is how long the average person has a reverse mortgage.
From "AR" in Fredericksburg: So, when I die, does the bank get the deed to the house, or does my estate need to sell the house to pay back the loan? Do my heirs have the option to keep the house if they pay back the loan? How's it work?
The bank never has the deed to your house, you always have that. If your estate sells the home, the loan will be paid off at closing like any other home loan would be and your estate keeps what is left over. If you heirs want to keep the house, they simply pay off the loan themselves just as they would with any other loan on a home.