Frequently Asked Questions

You must own your home and all owners must be at least 62 years of age. You should have significant equity in the home, but you do not need your existing mortgage to be completely paid off. In fact, the federal home equity conversion plan will help those with only a few years left on their mortgage stop making any future payments! All traditional mortgages must be paid off using the home equity conversion plan.

You must also live in your home at least half of the year. Eligible home types include single family homes, two- to four-unit homes, condominiums, planned urban developments, townhouses, manufactured homes, and mobile homes. Cooperative apartments are not eligible.

Other conditions may apply. Our knowledgeable loan officers can explain everything to you once they fully understand your personal situation.

A: No. Unlike traditional mortgages or home equity lines of credit, you do not need to make any ongoing payments.

A: No. All closing costs can be financed with the proceeds from your home equity conversion plan.

A: You will still own your home since you retain the title. Allied Home Mortgage can set aside proceeds from your home equity conversion plan to ensure that property taxes and homeowner’s insurance are paid, should you choose that option. We can even help you set aside cash for future home repairs. Similar to most mortgages, as long as you continue to live in your home, keep up repairs, and pay property taxes and insurance, you can stay in your home as long as you choose.

A: If your spouse is also listed on your home’s title, he/she will be able to continue residing in the home and receiving the benefits of a home equity conversion plan. If you do not have a surviving spouse, all equity remaining in the house will pass to your heirs. Your heirs can choose to sell the house, pay back the home equity conversion plan, or apply for a traditional mortgage to finance the outstanding balance. In that situation, the lender will work with your heirs to help them decide how to proceed.

A: Your interest rate will depend on the specific product you select. Home equity conversion plan rates are all adjustable rates, changing either monthly or annually, based on the current rate of the one-year Treasury bill, one-month certificate of deposit, or the six-month LIBOR indices (depending on the product you select).

A: Costs associated with a home equity conversion plan are like those you’ll find with traditional mortgages. For example, there are closing costs (including appraisal fees, origination fees, mortgage insurance, title insurance, etc.) and servicing fees. These fees can all be deducted from the home equity conversion plan line of credit. As a result, there are no out-of-pocket expenses.

A: Yes. With Allied Home Mortgage, you can choose from an HECM (Home Equity Conversion Mortgage) financed by Fannie Mae and insured by the FHA; a HomeKeeper home equity conversion plan by Fannie Mae; and a Financial Freedom Cash Account. HECM has been the home equity conversion plan of choice for over 90% of all customers, but the Cash Account may make sense for individuals with very high home values. Live Well Financial’s loan officers will help you make the decision that best suits your individual needs.

A: No. You can select a line of credit that will remain available as home equity should you never use the available line. With the HECM product, your available credit line actually grows at a rate relative to the current APR on the home equity conversion plan.

A: No. Unlike a home equity line of credit, there are no income requirements.

A: Social Security and Medicare benefits are not affected. Supplemental Security Income (SSI) and Medicaid are not affected either, as long as all monthly cash advances are fully spent each month. Allied Home Mortgage is happy to assist you in selecting the plan that will work best for you.

A: Yes. At any time you choose to increase the equity in your home, you can do so by paying all or a portion of your home equity conversion plan.

A: Yes, all advances you receive through a home equity conversion plan are tax-free. In addition, the interest paid on the outstanding mortgage balance may be tax-deductible, but generally not until the end of the loan.

A: Both products allow you to turn the equity in your home into accessible proceeds. But, unlike a traditional home equity line of credit, a home equity conversion plan does not require that you have an existing income stream in order to qualify, since it is designed to supplement your income. And, unlike a home equity line of credit, with a home equity conversion plan, you make no monthly payments and will have no out-of-pocket expenses.

A: No, you are not required to close and, legally, you have at least a three-day “Right of Rescission” period after closing to submit, in writing, a request to nullify the entire home equity conversion plan.

A: If you are considering moving out of your home in the near future, a home equity conversion plan may not be your best option. If you can see yourself wanting to leave your home in the near future, it is best to work with your family, friends, or financial advisor to determine the best course of action.