Reverse Mortgages have been around for almost 30 years. However, there are still many misconceptions about it. This week I am going to dispel some of these fallacies.
Common Myths and Facts about the Reverse Mortgage Program:
MYTH: If I do a Reverse Mortgage, the bank owns my home.
FACT: The Reverse Mortgage is a lien on your home just like any other mortgage you would have. You are not giving up the ownership of your home. With the Reverse Mortgage, the loan comes due with interest when you no longer live in the home. However, as a homeowner, you always have the option to sell your property and pay off the loan. You can move at any time, and you can leave your home to your heirs.
MYTH: I cannot do a Reverse Mortgage because I already have a mortgage on my home.
FACT: Paying off a current mortgage is the first thing most people do with the proceeds from this loan. By getting rid of your mortgage obligation, you can put all of that money back in your pocket each month.
MYTH: If I do a Reverse Mortgage, I cannot leave my house to my children when I die.
FACT: Since you always maintain homeownership, you have the freedom to leave your home to anyone you choose. The bank does not want your home; they want the money they lent you back.
MYTH: If I do a Reverse Mortgage, I cannot sell my home.
FACT: As a homeowner, you can sell your home at any time. If you choose to sell your home, you must pay off whatever you owe. The remainder of the money is yours to keep.
MYTH: The money I receive from the Reverse Mortgage will adversely affect my Social Security and pension. Also, it may put me into a higher tax bracket forcing me to pay more taxes.
FACT: The money you receive from the Reverse Mortgage is TAX-FREE because it is considered a loan, not income. As a result, it will not affect your Social Security or pension.
MYTH: My spouse will be forced to pay back the money if I die first.
FACT: The loan becomes due only when BOTH original borrowers no longer live in the home.
The Reverse Mortgage is like any other loan you have taken out throughout your life. It is a contract, you must qualify for it, and you are required to pay it back with interest when the loan comes due. The major difference between the Reverse Mortgage is you defer repayment until the time you no longer live in the home. Like anything in life, a Reverse Mortage is not for everyone. Some people just don’t need the additional money. However, many people have a majority of their assets tied up in their home. These are the people that can use the extra money. As a result, the Reverse Mortgage is a tool for those people. Rest assured, the Reverse Mortage is a federal loan and the government sets the guidelines, so you, your home and your heirs are protected.
Find out if the Reverse Mortgage is the right tool for you. Call us at 1-800-420-5515.