Reverse Mortgage Myths: Dispelled!
Reverse Mortgages have been around for almost 30 years. However, there are still many reverse mortgage myths people believe are true. Let us dispell these myths for you.
Reverse Mortgages are intimidating to most people. Not because they are actually overly complicated, but because there are many misconceptions about Reverse Mortgages that continue to perpetuate. Today, we are going to dispel 5 common myths about Reverse Mortgages you need to know so they aren’t so intimidating.
Myth 1: When You Get a Reverse Mortgage, You Lose the Title to Your Home
You don’t give away ownership of your home when you get a reverse mortgage. Just like any other mortgage, your name remains on the title. Of course, you still have to pay property taxes, insurance, and maintenance expenses to avoid foreclosure.
It is true that in order to have a Reverse Mortgage, you have to live in your home. However, you still own your home and can move or sell at any time. You simply have to sell your home and pay off the balance of your Reverse Mortgage before doing anything else.
So, rest assured, you always own your home when you do a Reverse Mortgage. With a Reverse Mortgage, you are simply taking a loan out for the amount of equity you have in the home.
Myth 2: You Need a Certain Credit Score to Get a Reverse Mortgage
Reverse mortgages do not have a specific credit score target to get access. Although your credit score history will be accessed through Financial Assessment procedures, a strict credit score is needed to qualify.
Myth 3: You Can’t Get a Reverse Mortgage because You Already Have a Mortgage on Your House
Reverse mortgages can eliminate any monthly mortgage payments you currently have. However, homeowners will still keep up to date on property taxes, insurance, and property maintenance to avoid foreclosure.
Myth 4: My Offspring will have to Deal With Paying Back the Loan
The truth is that your offspring have several options they can choose from when it comes to repayment. They can sell the home to pay off the loan and keep any remaining money from the sale.
A second option is, they can purchase the home for the amount owed or 95% of the appraised value, whichever is lower. They also have the option of walking away from the home entirely if they choose to.
With that said, don’t worry! Taking out a Reverse Mortgage doesn’t mean you are leaving your kids with your debt. If you pass before the balance of the Reverse Mortgage is paid in full, it will be repaid by the proceeds from the sale of your home. And, if the proceeds are not enough, your children are not responsible for the balance. The government guarantees this protection to you and your heirs.
Myth 5: Reverse Mortgages are Only for Seniors with a Certain Income Level
A reverse mortgage is not designed for one type of person or situation – it depends on your unique financial situation. The truth is that there are many seniors with varying levels of income that choose to get a reverse a mortgage.
While some people believe that a reverse mortgage is a ‘last mortgage’, there are different reasons why people get these loans.
Myth 6: The Lender will Evict me If I Outlive my Life Expectancy
This is simply not true, it’s yet another one of the Reverse Mortgage myths we hear constantly. 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 don’t put any time limit on how long you can stay in your home.
Myth 7: Reverse Mortgages are only for people who have no other options.
Many people think that they can only apply for a Reverse Mortgage if they have run out of other financial options. However, most people who apply for Reverse Mortgages and are approved actually have an abundance of other financial options, but choose a Reverse Mortgage because it offers a great deal of flexibility. It also provides for tax-free cash without creating a monthly payment.
Myth 8: Reverse mortgages are too expensive.
Although there are fees associated with a Reverse Mortgage, many homeowners find they are comparable to the closing costs of a traditional mortgage. Furthermore, homeowners who take a Reverse Mortgage believe the fees are worth the benefits they receive from the loan.
Now that you understand the facts about the Reverse Mortgage, it’s time to talk to your financial advisor or a representative from Reverse Mortgage Answers to get you on the track to a happy retirement!