If you are interested in learning more about getting a reverse mortgage, you may want to do some personal research into what it is. Unfortunately, there is some information surrounding reverse mortgages that is simply a myth. It can be frustrating not knowing what facts are real and what are fake, so to help you out we gathered some of the most common myths about reverse mortgages.
Myth: You lose the title to your home when you get a reverse mortgage
One of the main myths that we hear from our clients is the general belief that you lose the title to your home when you get a reverse mortgage. You are in no way giving away ownership of your home when you get a reverse mortgage loan. Just like any other mortgage, your name remains on the title. Of course, homeowners must still pay property taxes, homeowners insurance, and maintenance expenses to avoid foreclosure.
Myth: You need a certain credit score to get a reverse mortgage
There is this assumption that you need to have a good credit score to be qualified for a reverse mortgage. The truth is reverse mortgages do not have a mandatory credit score as a requirement. Credit history will still be assessed through Financial Assessment procedures, but a strict credit score is not needed to qualify.
Myth: I can’t get a reverse mortgage because I already have a mortgage on my house
One of the great things about reverse mortgages is that they can eliminate any monthly mortgage payments you currently have. As expected, homeowners must still keep up to date on property taxes, homeowners insurance, and overall property maintenance to avoid foreclosure.
Myth: My heirs will have to deal with paying back the loan
One of the main concerns that our clients have is that their children will have the burden of dealing with paying off the loan once they are gone. The fact is heirs have several options they can take when it comes to handling repayment. They can either sell the home to pay off the loan and keep any remaining money from the sale or they can purchase the home for the amount owed or 95% of the appraised value, whichever is lower. They can also walk away from the home entirely if they choose to.
Myth: Reverse mortgages are only for seniors with a certain income level
Another common myth that is associated with reverse mortgages is that they are catered only to seniors with a certain income. The truth is there are many seniors with varying income levels that choose to get a reverse mortgage. While some believe that reverse mortgages are a “last resort”, there are many different reasons why people get these loans. A reverse mortgage is not designed for one type of person or situation; it depends entirely on your unique financial situation.
Myth: I can only use my reverse mortgage funds in a specific way
A benefit from getting a reverse mortgage is that you can convert a portion of your home equity into money that can be used however you like. Some people still believe that you are limited to spending your money for certain things, such as medication. The fact is this is your money which can be used any way you want. You can use it to make updates on your house, travel, and more.
Myth: If I outlive my life expectancy, the lender will evict me
Given the increase in life expectancy for today’s seniors, some people believe that if they outlive their expectancy their lender will evict them from their home, which simply is not the case. The first thing you need to know is that you still own your home with a reverse mortgage. The second thing is that reverse mortgage lenders do not put any time limit on how long you can stay in your home.
All in all, there are many myths when it comes to reverse mortgages. It’s important to know of these myths so that you can decide if this is a good option for you. We hope you learned something new by reading this article that can better help you figure out if a reverse mortgage is right for you.