Did you know there are many myths with the reverse mortgage program? It’s true. There is a lot of information you can find on the internet and in newspapers talking about different things that have to do with the reverse mortgage program. However, some of the information out there is simply incorrect. Here are some common myths with the reverse mortgage program and the facts that you really need to know.
Myth – Your lender takes the title to your home.
Fact – Title on a reverse is no different than any other mortgage you have ever had- you are still on the title. When your home is sold or you move away, the loan must be repaid, but the title is never negotiable.
Myth – you need good credit for a reverse mortgage.
Fact – A reverse mortgage is only based on your home’s equity and the borrower’s age. Income and credit are not qualifying factors.
Myth – Reverse mortgage borrowers owe more than their home is worth.
Fact – The reverse mortgage loan is a non-recourse loan, which means the borrower can never be personally liable for more than the home’s value.
Myth – I cannot get a reverse mortgage if I already have a mortgage on my home.
Fact – A reverse mortgage can pay off your current mortgage, eliminating any monthly mortgage payment you have now*! Remember you are still responsible to remain current on taxes and insurance.
Myth – There are limits on how I can spend the money from my reverse mortgage.
Fact – It is your home, it is your money! You can spend your tax-free money** from you reverse mortgage any way you would like.
Myth – My children will be responsible for the repayment of the loan.
Fact – Revere mortgage are non-recourse loans. That means if the property is sold to pay off the loan when you pass away or decide to leave the home for other reasons, there will be no mortgage debt for your family or heirs to repay. The maximum amount owed is the current market value of the house. If your family or heirs wish to keep the home, they would pay the balance in full to the reverse mortgage lender.
Myth – Only low-income seniors get reverse mortgages.
Fact – Seniors from all different income levels decide a reverse mortgage is right for them every day. For some seniors it is a way to eliminate their monthly mortgage payment and have more financial freedom. For others it is a way to have a financial cushion for those unexpected bills. Some seniors are able to live their retirement more comfortably, and with little worry about how they will make ends meet. A reverse mortgage is not designed for one particular person; it’s for any seniors looking to make the most out of their retirement.
Myth – Reverse mortgage lenders take advantage of seniors.
Fact – As a consumer, you should make sure you are dealing with businesses who are a member of the Better Business Bureau. One Reverse Mortgage is a member of the BBB and has an A+ rating. One Reverse Mortgage is also a member of the National Reverse Mortgage lenders Association (NRMLA) which has a code of conduct that lenders must abide by. Our goal is to help you make the most out of your retirement. We will help you decide which reverse mortgage program will work best for your situation. We want you to be knowledgeable about the process and able to make an informed decision about the program for you.
Myth – Making the decision for a reverse mortgage is something that you decide on your own with no objective advisor available to you.
Fact- As part of the reverse mortgage process, all clients are required to complete a counseling session with an objective advisor. They explain all your options with your finances to make sure you are aware of all your choices.
Myth –If I outlive my life expectancy, the lender will evict me.
Fact – Reverse mortgage lenders put no time limit on how long you can stay in your home. You still own your home***, you cannot be evicted, as long as you continue to maintain your home and pay the property taxes and insurance fees.
*Homeowner is still responsible for taxes, insurance, and property maintenance.
**Please consult with your financial advisor.
***You remain responsible for counseling costs, taxes, insurance and maintenance expenses.