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Reverse Mortgage myths and misconceptions
The following are some common misconceptions and myths about Reverse Mortgages. If you have any other questions or want to learn more, please click here and someone will contact you directly by phone.
The bank/lender will own my home - FALSE!
You and your family or your estate continues to retain ownership of your home. The Lender does not take control of the title. The lender's interest is limited to the outstanding loan balance. The homeowner can choose to sell the home at any time.
My children will be responsible for repayment of the Reverse Mortgage – FALSE!
The reverse Mortgage is a non-recourse loan, which means the bank can never come after any person or estate for repayment of the loan. The bank can only receive payment of the loan from the value of the home.
Reverse Mortgage lenders just want to sell your house - FALSE!
Our lenders are in the business of helping you keep your home and meet whatever financial needs you may have in order to help you maintain financial independence. Reverse Mortgage borrowers may remain in the home for as long as they wish. However, should they decide to sell the home for any reason, the loan would then become due and payable.
You need a certain level of income, good credit, or good health to qualify - FALSE!
A Reverse Mortgage has no income, credit, or health requirements.
To qualify, my home must be paid off – free and clear – FALSE!
You may pay off your current mortgages with a Reverse Mortgage. Most people do so to eliminate their current monthly mortgage payments.
You have to make monthly payments on your Reverse Mortgage - FALSE!
There are never any monthly payments. Payment of taxes, insurance and general upkeep of the home are the only responsibilities of the homeowner.
Your home must be debt free to qualify for a Reverse Mortgage - FALSE!
You may have a mortgage or other debt on your home. The mortgage or debt however, must be paid off first with the proceeds of the reverse mortgage.
Only the "cash poor" or desperate senior citizens can benefit from the Reverse Mortgage - FALSE!
Even though some seniors may have a greater need than others for the cash or monthly income, the Reverse Mortgage can also be an excellent financial or estate planning tool.
I must be in good health to qualify - FALSE!
There are NO health requirements
My SS/SSI, Medicare/Medicaid benefits will be affected - FALSE!
A reverse mortgage does NOT affect these or most other means tested benefits. If you receive Supplemental Security income payments, you must spend the proceeds from the reverse mortgage. In short, the monthly cash advances need to be fully spent every month and not accumulated. It is advisable to check with your local agency on aging since programs do vary by state.
My loan terms will change if the loan is sold - FALSE!
The fact is that the terms of your loan can NEVER change. At closing you sign legal documents ensuring that your loan's terms CANNOT change.
I will owe more in taxes - FALSE!
Reverse mortgage proceeds are tax free because they are considered borrowed funds.
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