7 Myths About Reverse Mortgages
MYTH #1 – I’ve heard that the lender takes the title to my home.
This is not true. You own your home until you choose to move. That means title to your home remains in your name and you continue to enjoy all the benefits of homeownership. The reverse mortgage lender simply registers a mortgage on title, just like a normal mortgage. Your ownership is never at risk, and at no time will you be asked to move or sell to repay the loan. You’re in control.
MYTH #2 – I will need good credit to qualify for a reverse mortgage.
This is not true. A reverse mortgage has no income, employment, or credit requirements. Since the amount you receive is secured against your home, qualifying is easy and hassle free even if you are living on a very limited retirement income. In fact, a reverse mortgage may be able to provide you with additional tax-free spending money.
MYTH #3 – I cannot get a reverse mortgage if I already have a mortgage on my home.
This is not true. A reverse mortgage can be used to pay off your existing mortgage, and your remaining debts, and can even provide you with additional money after that. It all depends on the value of your home and your unique situation, but one of our agents would be happy to help you determine what is possible for you.
MYTH #4 – A reverse mortgage will affect my taxes.
This is not true. The money you receive from a reverse mortgage is technically a loan, and therefore it is not considered as income for tax purposes.
MYTH #5 – If I end up owing more than what my home is worth, I will be kicked out of my home!
This is not true. The reverse mortgage lender guarantees that the loan amount to be repaid will not exceed the fair market value of your home at the time it is sold. You will never be asked to move from or sell your home in order to repay the reverse mortgage. All that is required is that you maintain the condition of your property and stay up-to-date with property taxes, fire insurance premiums, and any condominium and maintenance fees. Of course, if you decide to move for your own reasons, you will need to repay the loan from the proceeds of your sale.
MYTH #6 – The reverse mortgage lender will own my home when I pass away.
This is not true. Your estate will own your home, but your heirs will need to obtain their own mortgage, unless they plan to sell the home, in which case the mortgage would simply need to be repaid.
MYTH #7 – There are restrictions on how I can use my reverse mortgage income.
This is not true. You can spend or give away the money any way you please. The only restriction is that any existing mortgages you may have must be repaid first from the proceeds from the reverse mortgage first. One of our agents would be happy to help you determine what would be possible and appropriate given your unique circumstances.