Misconception:
If I get a reverse mortage, the lender owns my house.
|
Fact:
The homeowner retains ownership. The loan is secured by a deed
of trust or a mortgage just like a regular "forward"
mortgage, however the homeowners NO LONGER HAVE TO
MAKE MORTGAGE PAYMENTS as long as they live in the
property. |
Misconception:
I can
be thrown out of my house.
|
Fact:
Homeowners can stay in their home until they move out of the
home permanently (sale, death, etc…). |
Misconception:
My heirs will be against it. |
Fact:
Experience demonstrates heirs, once educated about the loan
product, are in favor of Reverse Mortgages as it allows the
family member to live in their property without a financial
burden on the heirs. |
Misconception:
The loan balance could exceed the property value and I will
owe more than my house is worth. |
Fact:
The reverse mortgage loan amount due will NEVER
exceed the value of the home. If for some reason the loan balance
exceeds the value of the property the additional amount is “forgiven”,
and is NOT the responsiblity of the heirs. |
Misconception:
Reverse Mortgage loan proceeds/income will affect my Medicare/Social
Security income. |
Fact:
Loan proceeds DO NOT affect Social Security
or Medicare benefits. It is your “tax-free” money to spend as
you please. However, please consult your tax advisor should
you have any questions. |
Misconception:
The children will lose their inheritance. |
Fact:
Historically, most houses continue to appreciate over time.
A high percentage of houses still have enough equity to pass
down as inheritance – allowing heirs to sell the home or refinance
balance - and keep the difference. |
Misconception:
The costs of a Reverse Mortgage are too high. |
Fact:
Compared to other mortgage loans, in many instances the benefits
will outweigh the costs with the homeowners’ ability to finance
all closing costs (so there are no out-of-pocket expense). The
major benefit of a Reverse Mortgage is NOT having a monthly
mortgage payment, as long as the property is occupied as a primary
residence. In the long term, keeping the Reverse Mortgage for
the member’s life, the costs are comparable to regular mortgage
loans. |
