Misconception:
If I get a reverse mortage, the lender owns
my house.
|
Fact:
The homeowner retains ownership. The loan
is secured by a deed of trust or a mortgage
just like a regular "forward" mortgage,
however the homeowners NO LONGER
HAVE TO MAKE MORTGAGE PAYMENTS as
long as they live in the property. |
Misconception:
I
can be thrown out of my house.
|
Fact:
Homeowners can stay in their home until they
move out of the home permanently (sale, death,
etc…). |
Misconception:
My heirs will be against it. |
Fact:
Experience demonstrates heirs, once educated
about the loan product, are in favor of Reverse
Mortgages as it allows the family member to
live in their property without a financial
burden on the heirs. |
Misconception:
The loan balance could exceed the property
value and I will owe more than my house is
worth. |
Fact:
The reverse mortgage loan amount due will
NEVER exceed the value of
the home. If for some reason the loan balance
exceeds the value of the property the additional
amount is “forgiven”, and is NOT the
responsiblity of the heirs. |
Misconception:
Reverse Mortgage loan proceeds/income will
affect my Medicare/Social Security income. |
Fact:
Loan proceeds DO NOT affect
Social Security or Medicare benefits. It is
your “tax-free” money to spend as you please.
However, please consult your tax advisor should
you have any questions. |
Misconception:
The children will lose their inheritance. |
Fact:
Historically, most houses continue to appreciate
over time. A high percentage of houses still
have enough equity to pass down as inheritance
– allowing heirs to sell the home or refinance
balance - and keep the difference. |
Misconception:
The costs of a Reverse Mortgage are too high. |
Fact:
Compared to other mortgage loans, in many
instances the benefits will outweigh the costs
with the homeowners’ ability to finance all
closing costs (so there are no out-of-pocket
expense). The major benefit of a Reverse Mortgage
is NOT having a monthly mortgage payment,
as long as the property is occupied as a primary
residence. In the long term, keeping the Reverse
Mortgage for the member’s life, the costs
are comparable to regular mortgage loans. |
