| COMMON
QUESTIONS & ANSWERS |
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| Your home is a source of pride, and with a Reverse Mortgage it can also be a source of Security. This is a plan that allows you to tap into your major investment, your home. It requires no monthly payments
and allows you to remain in your home for as long as you choose and are
able to do so. It can help answer your financial needs, while insuring
you comfort and peace of mind for years to come. Here are answers to
some very common questions that Seniors may have. We hope this
information will be of help to you, and whatever decision you reach, we
wish you a happy and secure future.
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| Q:
| What is a Reverse
Mortgage?
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| A: |
A Reverse Mortgage is
a different kind of home equity credit line. If you are 62 or
older, we have programs that give you a special opportunity to convert
the equity you've built up over the years into tax-free cash advances.
And you don't have to own your home free and clear. |
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| Q: |
What's so unique
about this Program? |
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| A: |
To begin with, you
don't have to make monthly payments -- we have found a way to take
that load off your mind. |
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| Q:
| Let's get this
straight. NO Monthly Payments at all?
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| A: |
That's right. NO
Monthly Payments -- PERIOD. The only payment you'll ever make is one
final payment at the maturity of your account. |
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| Q: |
The
"Maturity of my account," what exactly does that mean? |
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| A: |
Depending upon the Program
you select, any of the following events may be considered "maturity
events" and would therefore require you or your estate to repay your
loan balance. If:
You sell or transfer an interest in the home securing your loan (other than to a joint borrower).
A lien is created against the home that may jeopardize the security interest in connection with the loan.
You fail to maintain homeowner's insurance or pay property taxes.
You die (for joint borrowers the last of you die).
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| Q: |
Exactly how much
will this payment be? |
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| A: |
Only the amount
of money you've borrowed, plus the interest charges that
have been added to your balance. |
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| Q: |
Can I sell my home
whenever I want? |
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| A: |
YES -- and pocket
whatever money is left over after you pay off your loan balance. For
instance, if you sell your home for $100,000 and your loan balance
has grown to $40,000, the remaining $60,000 is yours to keep. |
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| Q: |
Does the Lender own
the home? |
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| A: |
NO. You retain
the title to the property. The lender does not "get" the home when
the loan is due. You or your estate must pay back the loan at that time.
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|
| Q: |
How is the Reverse
Mortgage usually paid off? |
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| A: |
Generally, the home
is sold and the loan is paid off from the proceeds. |
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| Q: |
What if I want my
heirs to receive the home? |
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| A: |
At the time the loan
is due, the heirs may refinance the home and pay off the
amount that is due. |
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| Q: |
What if the amount
that is owed is more than the house is worth? |
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| A: |
This is a NON-RECOURSE
LOAN. Regardless of what the future does to your house's value, your
heirs will never be asked to cover any loan deficiencies.
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|
| Q: |
Once you give me
a line of credit, how long can I continue to live in my home? |
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| A: |
THERE IS NO SET
LIMIT. You can remain in your home as long as you live -- even
after you've used every dollar of your credit line -- until the maturity
of your account (Maturity of your account was discussed in a previous
question). |
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| Q: |
Can you get a Reverse
Mortgage if you already have a mortgage on your home? |
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| A: |
Yes. That mortgage will
be paid off with a lump sum advance from the Reverse Mortgage.
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|
| Q: |
Are there homes that
won't qualify for a Reverse Mortgage? |
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| A: |
Yes. Vacation homes
that are rented when not occupied by the Owner will not qualify. Mobile
homes and manufactured housing not attached to permanent foundations,
cooperatives, agricultural properties, rental properties of more than
four units, and homes on leased land. If the home is in an
area that is zoned commercial, this will not qualify either.
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| Q: |
What about a home
in a "Living trust?" |
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| A: |
Generally, there is
no problem with taking out a Reverse Mortgage if the home is in
a living trust. |
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| Q: |
Are there restrictions
on how I use my credit line? |
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| A: |
The money we lend you
is yours to use however you wish, whenever you wish. |
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| Q: |
Is it hard to qualify
for a Reverse Mortgage? |
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| A: |
No. There are only three
basic qualifications: 1. You must be at least 62
years old
2. You must have substantial equity in your home
3. Any existing liens against your home must be paid off
either before or at the time your loan closes. With a Reverse Mortgage,
a limited income or a past credit problem doesn't count against you.
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|
| Q: |
How come you don't
have any income requirements? |
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| A: |
Since we're not looking
for regular monthly payments, the normal credit criteria don't
always apply. In effect, your home assumes the loan obligation,
not you. |
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| Q: |
Will I have to take
a health exam? |
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| A: |
No. If your home
is healthy, that's all we care about. |
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| Q: |
What if my home needs
repairs? |
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| A: |
If the appraisal shows
that your home needs some work to meet the minimum standards, you can
pay for the repairs after you get your credit line. But if
those repairs are substantial, special arrangements will have to
be made. Contact your Excel Equity Counselor
for details. |
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| Q: |
How much credit will
my Reverse Mortgage give me? |
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| A: |
That depends upon two
things: your age and the value of your home. The older
you are and the more your home is worth, the higher your
line of credit is likely to be. The best way to get an accurate estimate
is to talk with one of our Equity Counselors. |
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| Q: |
How long will it
take for my loan to be approved? |
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| A: |
Once we have all the
information needed to process your application, it shouldn't take more
than 45 days. |
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| Q: |
I know that I'm going
to be charged interest. But on what? |
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| A: |
Interest is charged
only on the amount of credit you actually use and on the
accrued interest added to your loan balance each month, not on the total
amount of your credit line. No interest is ever charged on the
money you don't borrow. |
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| Q: |
How can I check the
interest rate I'm paying? |
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| A: |
It will be declared
on your account statement, along with your current loan balance.
You can also call your Excel Equity Counselor for your interest
rate. |
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| Q: |
Why is the money
from a Reverse Mortgage tax-free? |
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| A: |
Under current IRS guidelines,
the cash advances are considered "loan proceeds" and therefore
are not taxable. To answer your questions, check with your tax advisor,
attorney, accountant, or financial advisor. |
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| Q: |
Is the interest tax
deductible? |
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| A: |
Yes, generally. You
may be able to take the deduction at the time your interest is actually
paid -- at the maturity of your account. However, please consult
your tax advisor for the answer as it pertains to your particular situation.
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| Q: |
Will I have to pay
any up-front costs in getting my loan? |
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| A: |
This will be determined
by the program you select. There will be some standard mortgage processing
costs. In most cases, out-of-pocket expenses are minimal.
The closing costs and processing fees are generally paid from the proceeds
of your loan. To obtain a reliable estimate of what your costs will be,
just call one of Excel's Equity Counselors. |
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| Q: |
Suppose I already
have a mortgage on my home. Will that affect the amount of credit I can
get? |
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| A: |
Yes. Your existing mortgage
must be paid off when you get a Reverse Mortgage line of
credit. |
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| Q: |
Let's say that my
home depreciates in value. Will I have to give you back some of my credit
line? |
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| A: |
No. Even if the market
value of your home declines, your credit line cannot be reduced.
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| Q: |
My spouse and I have
joint ownership of our home. Can we still get a Reverse Mortgage? |
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| A: |
In most cases, yes.
But both of you must be 62 or older. Your line of credit will be
maintained for as long as one of you owns your home. So, the smaller your
mortgage, the higher your available line of credit. You can use proceeds
from your Reverse Mortgage account to pay off your existing mortgage
at closing. This will further improve your cash flow since
you will no longer have to make monthly mortgage payments. You will, however,
have to continue your tax and insurance payments. |
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| Q: |
What happens if I
die while my account is still open? |
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| A: |
Your estate will be
required to settle your obligation. When your home is sold, the proceeds
will be used to retire your loan balance. Any amount left over
belongs to your estate. |
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| Q: |
So even though I
might use all my line of credit, I may still be able to leave something
to my heirs? |
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| A: |
Possibly. If the value
of your house exceeds your loan balance when the loan matures,
the difference will belong to your heirs. |
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| Q: |
Does a Reverse Mortgage
affect Social Security, Medicare, or pension benefits? |
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| A: |
No, these benefits are
not affected. |
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| Q: |
What about SSI or
Medicaid? |
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| A: |
A Reverse Mortgage will
not affect these or most other means tested benefits as long as
the monthly cash advances are fully spent every month and not accumulated.
Some programs allow up to $2,000 in a checking account; others require
lesser amounts. Programs vary by state and even by county, so it is wise
to check with the local area agency on aging. |
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| The Reverse Equity Mortgage Program has assisted thousands of Seniors nationwide with a unique solution to today's challenging financial questions. EXCEL's
commitment to Reverse Equity Mortgages has established us as a leader
in assisting Seniors in taking full advantage of this opportunity by
offering the full range of programs available.
If you should have any further questions or require any additional information, please feel free to contact one of our Equity Counselors Toll Free at (800) 573-8091.
Thank You!
The Staff of Excel Senior Services
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