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FREQUENTLY ASKED REVERSE MORTGAGE QUESTIONS

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1. WHAT IS A REVERSE MORTGAGE? A reverse mortgage is a loan that enables senior homeowners, age 62 and older, to convert part of their home equity into TAX-FREE* income without having to sell thier home, give up little to it, or make monthly mortgage payments. The loan only becomes due when the last borrower(s) permanently leaves the home. *Please consult a tax advisor

2. HOW DOES A REVERSE MORTGAE DIFFER FROM A HOME EQUITY LOAN? Both a reverse mortgage and a home equity loan use the equity you have built up in your home to provide you with readily available cash. They differ in that with a home equity loan you must make regular monthly payments of both principal and interest. However, with a reverse mortgage you do not make any monthly mortgage payments for as long as you stay in your home. A reverse mortgage does not require income or credit underwriting.

3. WHAT ARE THE ADVANTAGES OF A REVERSE MORTGAGE? There are many. Here are a few of the most significant; Remain Independent: A reverse mortgage allows you to remain in your home and retain your ownership. No Monthly Mortgage Payments: You need not pay back the reverse mortgage loan nor make any monthly mortgage payments until you permanently move out of your home. Tax-free Money: Because the money you receive from a reverse mortgage is not considered income, it is tax free and will not affect your Social Security or Medicare benefits. Freedom and Flexibility: The money you get from a reverse mortgage is your to use in any way you choose.

4. DOES THE LENDER OWN YOU HOME? No, Never.The borrower retains title to the property. The reverse mortgage lender is merely extending a loan to the borrower.

5. CAN I REFINANCE A REVERSE MORTGAGE? Yes. Refinancing can make sense if your home increases in value, interest rates become lower or your then older age may allow for a larger loan amount.

6. IS IT POSSIBLE FOR MY LOAN BALANCE TO BECOME GREATER THAN THE VALUE OF MY HOME? No. You can never owe more that what your home is worth. Furthermore, since a reverse mortgage is what is known as a "non-recourse" loan, the lender cannot seek repayment from your income,your other assets, or your estate. In other words, your home stands for the debt only.

7. CAN THE LENDER TAKE MY HOME AWAY IF I OUTLIVE THE LOAN? No they cannot. And the loan is not due at that time either. In fact, you don't need to repay the loan as long as you or another borrower continues to live in the house and keep the taxes paid and insurance in force.

8. HOW MUCH MONEY CAN I GET? The amount you can borrow depends on several factors, including your age, the type of reverse mortgage you select, current interest rates, the location of your home, and the appraised value of your home and FHA's lending limits for your area. In most cases, the older you are, the more valuable your home, and the less you owe on it, the more money you can receive.

9. HOW CAN I USE THE MONEY? You can use the money for anything you choose, from daily living expenses, home improvements,health care,paying off existing debts, or simply enhancing your retirement. For many people, it simply provides a "financial Security Blanket" in case of unexpected expenses.

10. IN WHICH WAYS CAN I RECEIVE THE MONEY? You have many options. You can receive all the eligible money on one lump sum, you can take a predetermined monthly set amount or you can simply create a Equity Line to borrow against when and if the necessity arises or any combination of the above.

11. WHAT KINDS OF REVERSE MORTAGES ARE AVAILABLE? There are three different types;

i. Federally-Insured reverse mortgages. Known as Home Equity Conversion Mortgages (HECM), they are insured by the U. S. Department of Housing and Urban Development (HUD). They are widely available, have no income requirements, and can be used for any purpose. For more on HECM reverse mortgages, go to (http://www.hud.gov/offices/hsg/sfh/hecm/hecmabau.cfm).

ii. Government-sponsored reverse mortgages. The "Home Keeper" is Federal National Mortgage Association's conventional marker alternative to the HECM. It is a government-sponsored enterprise program and works like a HECM loan in many ways. However, a Home Keeper loan addresses a few needs that are not met by a HECM loan, such as individuals with higher property values, condominium owners, and seniors wishing to use a reverse mortgage to purchase a new home.

iii. Propietary Reverse Mortgages. These are private loans with some very unique features that appeal to certain kinds of borrowers. They allow for much higher valued homes and can serve the borrower with substantially more money. For more detailed information, please contact our Senior Lending Services division at (www.slsorg.org) or call 800-710-6606.

12. How will a reverse mortgage affect my estate? When you sell your home or no longer use it as your primary residence, you or your estate must repay the lender for the cash received, plus interest and servicing fees. Any remaining equity belongs to you or your heirs. It's important to remember that you can never owe more than the home's appraised value when it is sold. None of of your other assets will be affected by your reverse mortgage loan.

13. What are the costs and fees? Most reverse mortgages have an application fee (not required at SLS), an origination fee, actual closing costs, insurance and a monthly servicing fee of $20.00 to $30.00. These charges can be paid from the proceeds of the reverse mortgage, resulting in no immediate burden to the borrowers; the costs are added to the principal and paid when the loan becomes due. For detailed fees on your particular reverse mortgage request, pleas call 800-710-6606.