Reverse Mortgage Common Myths
Reverse Mortgage Myth #1
Myth: When I take out a Reverse Mortgage, I am signing my home over to the Government or the Lender.
Fact: Positively Not! Your home remains in your name. When you sell your home or vacate it for other reasons, only the accrued interest plus what the lender has paid you or on your behalf through the years is due and payable. Any proceeds in excess of this amount always belong to you or to your heirs. If your heirs choose to keep the home then they either refinance the amount owed or pay it off with other proceeds like life insurance. With a Reverse Mortgage You Always have Full Control and Ownership of your home.
Reverse Mortgage Myth #2
Myth: When I take out a Reverse Mortgage, I can lose my home because I have a mortgage.
Fact: You can never lose your home under this program because of monthly payments; While you always have the option to make interest or principal payment if you wish but there are no required monthly payments to make with a Reverse Mortgage. Just as now, however, you are required to keep your taxes and homeowners insurance paid, (which you can take money out of your Reverse Mortgage credit line to do) or you can lose the house just like without a reverse.This program also requires this to be your principal residence and you are required to keep the home in good repair.
Reverse Mortgage Myth #3
Myth: My Children or Estate will be responsible for the reverse mortgage debt.
Fact: The Reverse Mortgage is a non-recourse loan, which means the Lender can never require any person or your estate to pay anything more then what the house is worth, No monthly payments are due on a reverse mortgage while it is outstanding. The loan is repaid when you cease to occupy your home as a principal residence, whether you (the last remaining spouse, in cases of couples) passes away, sell the home, or permanently move out. The amount owed can never exceed the value of your home. Furthermore, if the home is sold and the sales proceeds exceed the amount owed on the reverse mortgage, the excess money goes to you or your estate.
Reverse Mortgage Myth #4
Myth: The house must be Free & Clear.
Fact: Many seniors use the reverse mortgage to pay off a mortgage, equity loan or other liens on their home with a reverse mortgage program so they will no longer have a payment. You must be able to get enough from the program to pay off any liens on the home or be able to bring any shortage to closing.
Reverse Mortgage Myth #5
Myth: Only desperate people use a reverse mortgage.
Fact: Far from it, while half of the folks over the years have used the program to solely allow them the means to stay in their home, the other half have used it as a sophisticated financial tool to improve their lives, to safe guard against future needs and to help their family with part of their homes asset while they can be there to see the results such as a grandchild's college education.