We want to help you make an informed decision. You may be unsure about getting a reverse mortgage because of what you have heard about them. Unfortunately, there are a lot of myths floating around about reverse mortgages and how they work. Most of which is completely untrue. Below are some of the common misconceptions about reverse mortgages. Click on each myth to reveal the facts. It is our goal to educate you on every step of the process and all the details with complete transparency, while providing you all the information you need to make this important decision.
For more information, please read The truth about Reverse Mortgages: facts vs. fiction.
Myth #1 – Your lender takes the title to your home.
FACT – Title on a reverse mortgage is no different than any other mortgage you have ever had – you are still on the title. When the house is sold or becomes vacant, the loan must be repaid, typically through the sale of your home or refinance.
Myth #2 – You need good credit for a reverse mortgage.
FACT – While the requirements for a reverse mortgage are not as strict as a traditional mortgage, your credit and income are reviewed to ensure you are in the safest financial situation to afford your taxes, insurance and maintenance of your home.
Myth #3 – Reverse mortgage borrowers owe more than their home is worth.
FACT – All of our reverse mortgages are non-recourse loans, which means the borrower can never be personally liable for more than the home’s value.
Myth #4 – I cannot get a reverse mortgage if I already have a mortgage on my home.
FACT – A reverse mortgage can pay off your current mortgage, eliminating any monthly mortgage payment you have now! Remember you are still responsible to remain current on taxes and insurance.
Myth #5 – There are limits on how I can spend the money from my reverse mortgage.
FACT – It’s your home, it’s your money! You can spend your tax-free money from your Reverse Mortgage any way you would like!
Myth #6 – My children will be responsible for the repayment of the loan.
FACT – Reverse mortgage are non-recourse loans. The obligation of the outstanding home loan is attached to the house, not the deceased client’s estate. If the family or heirs wish to keep the home and the balance is more than the home’s value they would only have to pay 95% of the appraised value to keep the home. Conversely, if the value is less than the balanced owed there is no obligation for the heirs to cover the difference. If there is significant equity remaining in the home the proceeds after paying off the reverse loan goes to the beneficiaries of the estate.
Myth #7 – Only low-income seniors get reverse mortgages.
FACT – Seniors from all different income levels decide a reverse mortgage is right for them every day. For some seniors, it is a way to eliminate their monthly mortgage payment and have more financial freedom. For others it is a way to have a financial cushion for those unexpected bills or for enjoying extra money in retirement. Some seniors are able to live their retirement more comfortably with a reverse mortgage from increasing their cash flow. A Reverse Mortgage is not designed for one particular person or situation; it’s for any senior looking to make the most out of their retirement by maximizing their access to money through reverse mortgage proceeds.
Myth #8 – Reverse mortgage lenders take advantage of seniors.
FACT – As a consumer, you should make sure your Reverse Mortgage company is a member of the National Reverse Mortgage Lenders Association (NRMLA) which has a code of conduct that lenders must abide by. Our goal is to help you make the most out of your retirement. We will help you decide which reverse mortgage program will work best for your situation. We want you to be knowledgeable about the process and able to make the most of the reverse mortgage program.
Myth #9 – Making the decision for a reverse mortgage is something that you decide on your own.
FACT – As part of the Reverse Mortgage process, all clients are required to complete a counseling session with an objective advisor. They explain all your options with your finances to make sure you are aware of all your choices.
Myth #10 – If I outlive my life expectancy, the lender will evict me.
FACT – Reverse mortgage lenders put no time limit on how long you can stay in your home. You still own your home, you cannot be evicted. You are required to maintain your home and pay the property taxes and insurance fees.