Top 5 Reverse Mortgage Myths
Myth 1: My Children will not inherit the house.
Fact 1: FALSE. Your children will have the legal rights to the home after you have passed away. The children or whomever you have left the home to will have to make a financial decision. They can keep the home by repaying the Reverse Mortgage loan balance once you have passed on, by refinancing or any other means. Or, your children can sell your home at the market value in the time of your passing (10 to 20 years from now), and pay back the Reverse Mortgage loan. If the value of the home in the time of your passing is higher than the Reverse Mortgage loan balance at that point in time, they will receive the difference, so they will still receive some monies.
Myth 2: If I take the Reverse Mortgage, the lender will own my home.
Fact 2: FALSE. No, the lender does not nor want to own your home. Your name will remain on the title of your home. You can choose to sell your home or refinance, at any time. The only responsibility is that the senior homeowner continues to live in and maintain the home. (You will still need to pay the property taxes, homeowner’s insurance, and condo fees.)
Myth 3: There are restrictions on how the Reverse Mortgage proceeds may be used.
Fact 3: FALSE. No, there are no restrictions on how this tax free monies can be used. The monies can be used for home improvement, paying off bills, vacations, college education for grandchildren, etc…
Myth 4: I can’t get a Reverse Mortgage if I have an existing mortgage.
Fact 1: FALSE. If your home isn’t paid off, the proceeds you receive from the Reverse Mortgage must first be used to pay off any existing mortgage(s). This is the most popular reason why senior homeowners take out the Reverse Mortgage. This will eliminate the monthly mortgage payment for the rest of your life. (You will still need to pay the property taxes, homeowner’s insurance, and condo fees.)
Myth 5: I won’t qualify for the Reverse Mortgage because of my limited income and my poor credit.
Fact 5: FALSE. It does not matter if you have low or high income nor what your credit scores are, the benefits that the senior homeowner receives are based on your age and the value of the home.