Frequently Asked Questions About Reverse Mortgages

If you answer “yes” to the following three questions, you may be eligible for a Reverse Mortgage:

1) Are you, and any other current owners of your home, 62 years old or over?*

2) Do you live in your home as a principal residence?

3) Is your home a single-family residence or a 2-4 family unit dwelling, a condominium, or part of a planned unit development (PUD)?

* World Alliance Financial exclusively offers certain Reverse Mortgages for homeowners age 60 and up.

- Tax-free funds for as long as you live in your home
- No loan repayment for as long as you live in your home
- No income, medical or credit requirements
- Retain ownership of your home for life; this is guaranteed as long as you maintain your home, and pay insurance and real estate taxes
- Choose a cash flow plan tailored to your needs
- No restrictions on how you may use the funds
- A tax-advantaged way to pass on part of your estate today

A Reverse Mortgage is exactly what its name implies — a loan whose features make it essentially the reverse of a traditional “forward” mortgage. Instead of paying your lender, your lender pays you. Instead of reducing your debt as the loan term progresses, you increase it. Instead of turning your income into equity, you turn your equity into income.

That last feature — the ability to turn your equity into income — is what most distinguishes a Reverse Mortgage from other loans, and it’s what makes it so valuable to many senior homeowners. Having spent years repaying the mortgage that allowed you to buy your home, you can now tap into that investment to help you achieve your goals later in life. However you plan to use your equity — whether traveling, paying medical expenses, improving your home, or just adding a bit of cushion to your monthly budget — you’ll have a golden opportunity to put your nest egg to good use.

Depending on the product you have five options:
Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.

Term - equal monthly payments for a fixed period of months

Line of Credit - unscheduled payments or installments, in amounts of borrower’s choosing until the line of credit is exhausted.

Modified Tenure - combination of line of credit with monthly payments for as long as the borrower remains in the home.

Modified Term - combination of line of credit with monthly payments for a fixed period of months.

Is there only one kind of Reverse Mortgage?

No. In fact, there are several types of Reverse Mortgages that can affect the cost of the loan, the total amount of the loan, and even how you’re able to spend the money you receive. Your Reverse Mortgage specialist understands all the rules for each and can help you determine which type would be most beneficial for you.

I’m interested, but I have more questions. Who can I talk to?

Before getting a Reverse Mortgage, you will first have the opportunity to meet face to face with an independent Reverse Mortgage counselor at no cost to you. Your counselor will answer any questions you have, inform you about other alternative options for your unique situation, and help you decide if a Reverse Mortgage is right for you, and if so which type would be the best fit for your needs.

What are the costs involved?

The only costs to get started include a small, one-time application fees which covers the cost of a professional home appraisal and credit report. The long-term costs of a Reverse Mortgage are similar to a traditional mortgage, including interest charges, origination fees, closing costs, and insurance. These costs can simply be added to your loan balance.

My house is not paid off yet. Can I still get a Reverse Mortgage?

Absolutely as long as your equity is greater than the amount you still owe. You can either pay off the old debt before you get a reverse mortgage, or you can use the initial proceeds from the reverse mortgage to pay the debt.

If I get a reverse mortgage, does the bank own my house?

Absolutely not. With a reverse mortgage you still own your home. Of course, that means you must continue to pay your property taxes, make necessary repairs to the home, and keep home-owner’s insurance.

Will my children be responsible for repayment of the Reverse Mortgage?

No. A Reverse Mortgage is what is called a non-recourse loan. This means the bank can never come after any person or estate for repayment of the loan. The bank can only use the value of the home as repayment.

Are there any restrictions I need to be aware of?

During your loan period, there may be restrictions for:
- Renting out your home
- Adding new owners to the home’s title
- Changing your home’s zoning classification, or
- Taking out new debt against your home

What if I change my mind?

After you close your reverse mortgage, you still have a chance to reconsider. Should you decide for any reason that you no longer want the loan, you have three days to cancel.

Isn’t it selfish to get a Reverse Mortgage rather than leave my estate to my children?

Some potential reverse mortgage candidates are concerned they will have less home equity to leave their heirs – until they actually speak with their heirs. Many adult children want to see their parents live comfortably and enjoy their retirement rather than struggle just to leave something behind when they die. Besides, a Reverse Mortgage can actually grant seniors the freedom to help their children and grandchildren with expenses while they are still alive to see them enjoy it. And don’t forget: your heirs will still receive the remaining equity after the loan is repaid.

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Every borrower has specific needs and goals. In our commitment to making a difference in communities near and far, World Alliance Financial offers a host of innovative products suited to every individual requirement. We also offer the latest in financial tools that allow us to decrease loan-processing time, reduce costs, and remain fiercely competitive in the industry.