Reverse Mortgages are revolutionizing the way seniors are securing financing. While HUD's Reverse Mortgage is a safe and federally-insured program that gives older Americans greater financial security, many seniors have received false information.
Listed below are the top Reverse Mortgage Myths $amp; Misconceptions:
THE BANK OR LENDER will take my home and I will not own it anymore.
FALSE!
The homeowner always retains title to the property and can choose to sell the home at anytime. There are no prepayment penalties or restrictions of any kind. The lender’s interest is limited to the outstanding loan balance and they do not take control of the title.
MY CHILDREN will be held responsible for repayment of the Reverse Mortgage. will take my home and I will not own it anymore.
FALSE!
The Reverse Mortgage is a non-recourse loan. This means that the lender can only derive repayment of the loan from the proceeds of the sale of the property.
TO QUALIFY, my home must be paid off "Free $amp; Clear."
FALSE!
You may payoff a mortgage or equity loan with a Reverse Mortgage. In fact, many people get a Reverse Mortgage for this reason: to get rid of their monthly payments forever.
I MUST HAVE good income and credit to qualify.ill take my home and I will not own it anymore.
FALSE!
A Reverse Mortgage has no income or credit qualifications. To qualify you need to be at least 62 years of age and your home must be your primary residence and the home must have enough equity in it.
I MUST MEET income or health requirements to qualify for a Reverse Mortgage. will take my home and I will not own it anymore.
FALSE!
There are no income or health requirements to qualify.
THE REVERSE MORTGAGE REQUIRES that I make monthly payments. will take my home and I will not own it anymore.
FALSE!
There are never monthly payments. The borrower is only responsible for payment of taxes, insurance, and general upkeep of the home.
I CAN'T GET A REVERSE MORTGAGE because my house needs too many repairs.
FALSE!
A reverse mortgage is a great way to get some needed home repairs accomplished without increasing monthly payments. As part of the process of getting a reverse mortgage a property appraisal is performed by a FHA-licensed appraiser. In addition to estimating the home value the appraiser gives a listing of any repairs that would be required to bring the home up to FHA property standards. Usually, these repairs can be performed after the reverse mortgage is in place and paid for by the proceeds of the loan.
IF I DO A REVERSE MORTGAGE I will eat up all my equity and leave nothing for my kids.
FALSE!
"Retained Equity" is a very important concept to grasp. Realize that your property should continue to appreciate (the whole value of the estate) and you pay interest on only the smaller amount borrowed.
ONLY THE "CASH POOR" or desperate seniors can benefit from the Reverse Mortgage.
FALSE!
Even though some seniors may have a greater need than others for the cash or monthly income, the Reverse Mortgage can also be an excellent financial or estate planning tool to enhance the quality of life and better manage their assets.
