Frequently Asked Questions

Frequently Asked Questions

Dollar Bank realizes that you may have a lot of questions about Reverse Mortgages. Below are a few of the most commonly asked questions.

Click a question below for the answer.


What is a Reverse Mortgage?
A Reverse Mortgage allows homeowners, 62 years of age or older, to take advantage of the equity in their home and use it as tax-free income while living in their own home.* There are no monthly mortgage payments for as long as you stay in the home. The loan becomes due when you no longer occupy your home as a principal resident.

*Consult your tax advisor regarding the tax implication of Reverse Mortgage options.

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What are the requirements to qualify for a Reverse Mortgage?
To qualify for a Reverse Mortgage, you must be 62 years of age or older and a homeowner with equity in your home. There are limited income and credit qualifications.

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How do you determine how much money I can receive?
How much money you receive depends on several factors: your age, the type of Reverse Mortgage you choose, current interest rates, the amount of existing equity and the appraised value of your home.

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Are there any fees associated with obtaining a Reverse Mortgage?
Yes, most have application, origination and monthly servicing fees along with closing costs and insurance. These fees can be paid by adding them to the principal of the Reverse Mortgage and can be repaid when the mortgage becomes due.
The appraisal fee will have to be paid upfront.

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What are the benefits of a Reverse Mortgage?
With a Reverse Mortgage, you'll be able to live financially independent with these advantages:

  • Ability to maintain home ownership and live in the home as long as you wish
  • Pay off your current mortgage and have no monthly mortgage payments
  • Receive the money tax-free and use it to supplement your monthly income, pay medical expenses or eliminate debt*
  • Limited income and credit qualifications​

*Consult your tax advisor regarding the tax implication of Reverse Mortgage options.

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How does a Reverse Mortgage differ from a home equity loan?
While both use the equity you have built up in your home as a way to gain access to money, with a home equity loan you'll make monthly payments. With a Reverse Mortgage, the loan is not due for payment until the last borrower leaves the home or dies.

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How will the money be disbursed?
You chose how you would like to receive the money from the equity in your home:

  • Receive a lump sum
  • Receive monthly payments for as long as you live in the home or for a fixed period of time (e.g. monthly payments for two years)
  • Establish a line of credit to access funds as needed
  • A combination of the above

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What are the types of Reverse Mortgages available?
There are two types of Reverse Mortgage options available to meet your individual needs:

  • HUD/FHA Home Equity Conversion Mortgage (HECM)
    A government-insured program that provides cash, a line of credit or a monthly income as long as the person lives in the home
  • HECM for Purchase Program
    Created by the Housing and Economic Recovery Act of 2008, this allows a senior to relocate by purchasing a new principal residence and obtain a Reverse Mortgage within a single transaction eliminating the need for a second closing.

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Will my heirs be able to inherit my home?
Yes. Since the title of the home will remain in your name, not the bank's, you will be able to leave your home to your heirs.

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When will the Reverse Mortgage become due for payment and what will be owed?
The mortgage becomes due for payment when the last borrower permanently leaves the home or dies. The principal, interest and any fees (e.g. closing costs) will be owed on the Reverse Mortgage. The heir can either sell the home to pay off the mortgage or use another source of income to make monthly payments. No one will ever owe more than what the home is worth at the time it's sold.

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Are there any tax consequences to a Reverse Mortgage?
No. Since the government does not consider the funds from a Reverse Mortgage as income, it's not taxable. It also has no affect on the monies you receive from Social Security or Medicare benefits. Please consult your tax advisor for complete details.

*Consult your tax advisor regarding the tax implication of Reverse Mortgage options.

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This advertisement was not directly provided or approved by the U.S. Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA) or any other government agency. All information in this advertisement has been reviewed and approved by Dollar Bank’s Reverse Mortgage Professionals to be true and correct.

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