Reverse Mortgage Misconceptions

With the growing demand of Reverse Mortgages, there is a lot of potentially misleading information about how the program operates.  Here are some of the common concerns we hear from our Reverse Mortgage clients: 

When I do a Reverse Mortgage, the lender will own my home.
You and your family, or your estate, continues to retain ownership of your home. The lender does not take control of the title. The lender places a lien against the property, and is limited to the outstanding loan balance.

Reverse Mortgage lenders just want to take my house.
Lenders are in the business of helping you keep your home and meet whatever financial needs you may have in order to help you maintain financial independence. Reverse Mortgage borrowers may remain in the home for as long as they wish. However, should they decide to sell the home for any reason, the loan would then become due and payable. 

My heirs will owe money when the property is sold.
The Reverse Mortgage is a non-recourse loan. This means that the lender can only receive repayment of the loan from the proceeds of the sale of the property. 

I need a certain level of income, good credit, or good health to qualify.
A Reverse Mortgage has limited income requirements which require the borrower to document sufficient income to maintain the property taxes and insurance.  Ther is no minimum credit score required for the reverse mortgage and there are no health requirements. 

I have to make monthly payments on my Reverse Mortgage.
There are never any monthly payments. Payment of taxes, insurance and general upkeep of the home are the only responsibilities of the homeowner. 

My home must be debt free to qualify for a Reverse Mortgage.
You may have a mortgage or other debt on your home. Any liens against the property must be satisfied with the proceeds of the reverse mortgage, and all remaining funds are yours to be received however you like. 

I have enough money to get by.  I can't benefit from the Reverse Mortgage.
Even though some seniors may have a greater need than others for additonal income, the Reverse Mortgage can also be an excellent financial or estate planning tool. 

I will have to pay taxes on the money received from the Reverse Mortgage.

Reverse mortgage proceeds are treated the same as any other conventional mortgage against your propery.  Because the money comes from a loan, it is not subject to income tax (consult with your tax professional).

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