Common
Questions about Fannie Mae's Home Keeper Reverse Mortgages
Q: What is the Home Keeper Mortgage?
A: Fannie Mae’s proprietary reverse mortgage product
is designed to benefit homeowners age 62 or older
who are looking for a way to tap their home equity
without having to pay back the loan while they still
live in their home. With a Home Keeper, you borrow
against the value of your home, and receive loan
proceeds according to the payment plan that you
select. It can provide the maximum amount of
flexibility to address your particular financial
needs — whether it is a lump sum to pay an
unexpected hospital bill, or a stream of regular
payments to supplement your monthly income. Unlike
traditional home equity loans, no repayment of the
loan is required until you no longer occupy the home
as your principal residence. When you sell your home
or move, the accrued interest plus any cash the
lender has paid to you becomes due and payable.
Q: Who is eligible for a Home Keeper?
A: You, and any co-borrowers, must be at least 62
years old and either own your home free and clear or
have a very low outstanding mortgage balance that
can be paid off at loan closing. The home must be
your principal residence and also be a
single-family, one unit dwelling or a condominium or
Planned Unit Development (PUD) that meets standard
Fannie Mae requirements. You also must agree to
accept mortgage counseling from a nonprofit or
public agency engaged in reverse mortgage
counseling, or from a Fannie Mae counselor. Family
members are strongly encouraged to attend these
counseling sessions.
Q: How much money can I borrow?
A: The maximum amount you can borrow—the principal
limit—is based on three factors: the number of
borrowers, the ages of those borrowers, and the
adjusted property value. The adjusted property value
is the lesser of the appraised value of your home or
the Fannie Mae loan limit, which is revised
annually. Your principal limit is determined at the
time you close your loan.
Q: What payment plans are available?
A: In Arizona, a borrower may choose among three
payment options: tenure, modified tenure, and a line
of credit. You may change payment plans at any time,
and as often as you like, for a small fee.
-
Tenure option: You will
receive equal monthly payments for as long as
you occupy your home as a principal residence.
-
Line of Credit option:
You may draw up to a maximum amount of cash at
times and in amounts of your choosing, as long
as you occupy your home as a principal
residence. (Option not available in Texas.)
-
Modified Tenure Plan:
Allows you to set aside a portion of loan
proceeds as a line of credit and receive the
rest in the form of equal monthly payments as
long as you occupy your home as a principal
residence.
No matter which payment plan you select, with the
Home Keeper you will have the security of knowing
that repayment is not required until you no longer
live in your home—as long as you abide by your
agreement with your lender to pay your taxes and
insurance and to maintain your property.
Q: How is my monthly payment amount determined?
A: If you elect the tenure or modified tenure
option, the amount of your monthly payment is
determined by considering the following factors:
your principal limit (the amount of cash available
to you as a borrower) and the length of time you are
expected to remain in your home, based on life
expectancy. The older you are, the larger your
payments are likely to be. The following example
shows monthly payments available under the Tenure
Option:
| Age |
Adjusted
Property Value |
| |
$100,000 |
$200,000 |
$300,000 |
| 65 |
$112 |
$258 |
$405 |
| 75 |
302 |
693 |
976 |
| 85 |
521 |
1,061 |
1,609 |
(These figures are approximate and assume an 8.5
percent interest rate, financing of $2,000 in
closing costs and the initial mortgage insurance
premium, and the payment of a $30 monthly servicing
fee.)
Q: Will Home Keeper payments affect my Social
Security, Medicare, Supplemental Security Income (SSI),
or Medicaid benefits?
A: Home Keeper payments do not affect your Social
Security or Medicare benefits because they are not
based on the assets of the recipient. However, in
the federal SSI program, beneficiaries must keep
their liquid resources under certain limits. With
Home Keeper, you can choose to suspend your monthly
payments for a specified period. You may wish to
exercise this option if you receive SSI or Medicaid
payments, do not have an immediate need for the loan
funds, and are concerned about failing the SSI asset
test. Regulations vary for state-administered
programs such as Medicaid, Aid for Dependent
Children (AFDC), and food stamps. Therefore, we
suggest that you consult a benefits specialist at
your local Area Agency on Aging or the local offices
for these programs to determine how Home Keeper
payments may affect your particular financial
situation.
Q: Will I have to pay any fees to obtain a Home
Keeper?
A: Yes, you will have to pay a one-time origination
fee and other closing costs. In addition, your
lender will assess a servicing fee each month to
administer your loan. You may be able to finance the
origination fee and other closing costs - that is,
these items may be included in your loan balance so
that you do not have to pay for them in cash when
you close your loan.
Q: Can I be forced to sell or vacate my home if
the money I owe on the loan exceeds the value of my
home?
A: No. As long as you continue to occupy the
property as your principal residence, maintain the
property, and pay your property taxes and insurance,
you can stay in your home for as long as you choose.
No deficiency judgment may result from your Home
Keeper loan.
Q: Will my heirs owe anything to the mortgage
lender if I die?
A: Upon your death, the loan balance, consisting of
payments made to you or on your behalf plus accrued
interest, becomes due and payable. Your heirs may
repay the loan balance by selling the home or by
paying off the Home Keeper loan so that they may
keep the home. If the loan balance exceeds the value
of your property, your estate will owe no more than
the value of the property. No additional financial
claims may be made against your heirs or estate.
Q: If my home appreciates in value during the
mortgage term, who will be entitled to that money?
A: You are legally required to pay back to the
lender only the outstanding balance. Any money
remaining after the mortgage is paid goes to you or,
upon your death, to your heirs.
Q What if I decide to sell my home?
A: If you choose to sell your home, the outstanding
loan balance becomes due and payable to the mortgage
lender. You can pay the loan balance with proceeds
from the sale of your home, and you or your estate
will receive any proceeds exceeding the loan
balance.
Q: Can I sell my home to my children and continue
to live in it?
A: If you sell your home to your children or any
other individual, the Home Keeper will become due
and payable at settlement. After the loan is repaid,
any arrangement for your continued occupancy of the
property must be made with the new owners.
Q: What are some of my responsibilities as a
homeowner with a reverse mortgage?
A: To keep your real estate taxes and homeowners
insurance current. And to properly maintain your
home so that it’s value does not diminish.
Q. How can the Home Keeper mortgage be used to
purchase a new home?
A. The Home Keeper for Home Purchase reverse
mortgage may be used by persons 62 years of age or
older to buy a home, ultimately eliminating monthly
mortgage payments. This loan combines features of a
home purchase mortgage and a reverse mortgage into
one easy step, giving you instant access to your
home equity. In most instances, this loan is used by
homeowners who want to sell their current home and
buy another one that suits their needs. The lender
will use the purchase price of the new home, your
age(s), and the current Fannie Mae loan limit to
determine your eligible principal limit. Depending
on the purchase price of the home, you may be
required to apply part of your own funds toward the
purchase and cost of closing.
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