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Common Reverse Mortgage Myths
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Money For What Really Matters |
MYTH #1
IF I GET A REVERSE MORTGAGE, THE BANK WILL
THEN OWN MY HOME – Only you and your spouse
own the home and the bank is never on title.
Once you move out of the home or it passes
to your heirs, the loan must be repaid.
Typically this is done through a refinance
or selling the home. When the reverse
mortgage comes due, you or your heirs must
pay the balance on the reverse mortgage.
This can be done by paying off the loan in
cash, refinancing it traditionally or
selling the home and paying the balance with
the sales proceeds. This is done by you or
your heirs and not the bank.
MYTH #2
WHEN THE LOAN IS DUE, I MAY OWE MORE THAN IT
IS WORTH – A reverse mortgage is a
“non-recourse” loan which means that even if
you live to be 150, are forced into an
assisted living facility, pass away, move
out or even sell, you will never owe more
than what the house is worth.
MYTH #3
I MUST OWN MY HOME FREE AND CLEAR TO QUALIFY
FOR A REVERSE MORTGAGE – Many seniors with
outstanding first mortgages are still able
to qualify for a reverse mortgage. The
proceeds from the reverse mortgage must
first be used to pay off the lien on the
home however.
MYTH #4
WHEN ONE SPOUSE PASSES AWAY THE SURVIVING
SPOUSE HAS TO MOVE – As long as the spouse
is on the title to the property, they will
not be forced to move out. If the spouse is
not on title, they will need to either pay
the loan balance in cash or refinance the
balance the balance through traditional
means.
MYTH #5
REVERSE MORTGAGES ARE ONLY FOR DESPERATE
SENIORS, OR FOR THE “HOUSE RICH, CASH POOR.”
– The benefits of a reverse mortgage can be
far reaching. As your home is typically your
biggest asset, a reverse mortgage is
becoming a popular financial planning
vehicle to greatly improve the retirement
years of many seniors. Many seniors are
using the proceeds from a reverse mortgage
to travel, establish education funds for
their grandchildren or even pay for the
remodeling of their home to fit their
current needs.
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