Fact vs. Fiction (or Common Misconceptions)

Let’s clear up some wrong-thinking! Although we call it a reverse mortgage, it is not exactly the opposite of a conventional mortgage! Here are some common misconceptions!

• Many people believe they have to sign over their title. Not true! You still own your property and have full rights and responsibilities. That means you continue to maintain your home and pay taxes and insurance on the residence.
• Many think, “I will be thrown out of my house when I run out of reverse mortgage funds!” Not true! The reverse mortgage is not due until the last survivor leaves the home. And the amount owed cannot be more than the value of the home, no matter how much was paid out!
• People worry, “If I receive too much money my children will inherit a debt!” Not true! These mortgages have a special term, non-recourse. It means you will never owe one cent more than the amount you can get from selling your home. Your heirs will not be charged more either!
• Some worry, “The lender can sell my home when the reverse mortgage comes due!” Not true! It is up to the homeowner or the homeowner’s heirs to sell the property. If the home is sold for more than the amount owing on the reverse mortgage, the heirs or the estate keep all additional funds.
• Some think they can’t get a reverse mortgage because they still owe money on their home. Not true! Existing mortgages are paid off with reverse mortgage funds. The interest is typically low. The homeowner will receive any additional funds.
• Seniors can worry about taxes, thinking additional funds equate to income. Not true! The IRS does not consider money received from a reverse mortgage loan to be income. It is your own equity, not income. Be sure to consult your tax advisor for more information!
• Some think reverse mortgages are only for the poor. Not true! Many seniors remodel homes, improve their standard of living, take vacations. The amount of interest charged against equity is small, making a reverse mortgage an excellent place to obtain funds!
• Most think the qualifications are the same for getting a regular mortgage. Not true! Income and credit scores are not considered a basis for refusing to issue a reverse mortgage loan. How many seniors do you know working 40 hours a week? It would be unreasonable to expect seniors to have the same types of jobs a younger person would have. Income and credit are not viable, because they will be paying you!
• Many think reverse mortgages are so complex they would be better off not exploring their options. Not true! That is why we have The Reverse Mortgage Helpdesk! Call us with any questions! We want you to make informed decisions and to be not afraid of learning all about what a reverse mortgage can do for you!