Reverse Mortgages can be a helpful financial tool for many retirees, but unfortunately, there are a lot of misconceptions that can make them seem intimidating or even risky. In this article, we’ll address five of the most common myths about Reverse Mortgages to help you understand the facts and make an informed decision.
Myth #1: Reverse Mortgages are only for people who have no other options.
Many people think that a Reverse Mortgage is a last resort for those who have no other financial options. However, this is simply not true. In fact, many retirees who apply for and receive approval for Reverse Mortgages have plenty of other financial options but find that a Reverse Mortgage is the best solution for their needs. A Reverse Mortgage can provide additional funds to help you enjoy your retirement and pursue the things you want to do, not just the things you need to do.
Myth #2: If I get a Reverse Mortgage, I can never sell my home.
This is another common misconception that can deter people from considering a Reverse Mortgage. The truth is that you can absolutely sell your home if you have a Reverse Mortgage. If you decide to move or need to move, you can simply sell your home and use the proceeds to pay off the balance of your Reverse Mortgage. This means that a Reverse Mortgage does not lock you into your home for the rest of your life.
Myth #3: Getting a Reverse Mortgage means I don’t own my home.
This is a very common misunderstanding about Reverse Mortgages. If you currently own your home with no mortgage, getting a Reverse Mortgage does not mean that you are turning over the deed to the bank. With a Reverse Mortgage, you are simply taking out a loan for the amount of equity you have in your home. You still retain ownership of your home and can continue to live in it for as long as you like.
Myth #4: Reverse Mortgages are too expensive.
While it is true that there are fees associated with a Reverse Mortgage, many homeowners find that these fees are comparable to the closing costs of a traditional mortgage. Additionally, many retirees who take out a Reverse Mortgage feel that the fees are worth the benefits they receive from the loan, such as additional income or access to cash to fund their retirement.
Now the final and most prevalent of our commonly heard misconceptions.
Myth #5: If I don’t pay off my Reverse Mortgage, my kids will have to.
This is a common misconception that can cause undue stress for retirees who are considering a Reverse Mortgage. The truth is that if you pass away before the balance of your Reverse Mortgage is paid in full, the loan will be paid off by the proceeds from the sale of your home. If the proceeds from the sale are not enough to cover the balance of the loan, your children are not responsible for the remaining balance.
Now that we’ve debunked these five common misconceptions about Reverse Mortgages, you can make a more informed decision about whether this is right for you. If you’re considering a Reverse Mortgage, we recommend talking to a financial advisor or a representative from a reputable lender to help you explore your options and make the best decision for your retirement.