The Reverse Mortgage FAQ


What is a reverse mortgage loan?

  • It’s a special type of loan that enables borrowers who are at least 62 years of age to convert some of their home equity into loan proceeds that are typically tax free (consult your tax advisor)

What are the eligibility requirements?

  • Borrower (s) who are at least 62 years of age and occupy the property as their residence
  • Eligible properties include single-family homes, condominiums and town homes, or a 2-to-4 unit dwelling
  • The home must be owned free and clear or you must refinance an existing mortgage loan and without the required monthly mortgage payments of a traditional mortgage. Repayment is required if the borrower(s) no longer reside at the property, taxes and insurance on the property are not kept current, the property is not maintained to FHA standards, or other program requirements are not satisfied
  • Generally, there are no income, employment or credit score requirements. Borrower(s) are required to obtain an eligibility certificate by receiving counseling from a HUD-approved agency: Family members and financial advisors are also strongly encouraged to participate in these informative sessions.

What are some of the benefits?

  • The reverse mortgage loan borrower retains ownership and lives in their home, as long as all other program requirements are met.
  • Loan proceeds can be used for any purpose including meeting daily and monthly expenses, or covering health care expenses.
  • Loan proceeds are not considered income.

What type of interest rate options are there?

  • Mortgage South provides both fixed and variable rate reverse mortgage loans for the customers.

What are the distribution options?

  • With a variable-rate reverse mortgage loan, you can choose anyone (or a combination) of these flexible distribution options:
    • A lump sum to cover large expenses
    • Monthly advances to supplement income
    • A line of credit to draw on as needed
  • And, with a variable rate reverse mortgage loan, you can even change how you receive your reverse mortgage loan proceeds as often as your needs or your situation changes over time.
  • With a fixed-rate mortgage loan, a lump sum distribution is required.


What are the costs associated with a reverse mortgage loan?

  • A deposit for the appraisal is an out of pocket expense.
  • Government counseling fee applies.
  • There are additional costs, such as an origination fee, title insurance, a mortgage insurance premium and attorney fees.
  • The borrower is expected to continue maintaining the property and paying the taxes and insurance premiums on the property.