A Reverse Mortgage may be a bit confusing or unfamiliar to many home owners. To help provide some clarification, below are some of the common myths about Reverse Mortgages.
A Reverse Mortgage will cause me to lose my home.
A Reverse Mortgage is a lien; you still own your home. You will have to continue to pay your property taxes and insurance on the home.
The income I receive from my reverse mortgage will not affect my Social Security and other benefits.
This is a wonderful benefit of a Reverse Mortgage. It is a loan, and therefore is not considered taxable income. It will not lower important Social Security and Medicare benefits.
My children will be responsible for the repayment of the loan.
If a borrower or their estate wants to retain ownership of the property, the balance of the loan must be paid off. However, the owner can sell the home, and any equity in the home at the time of the sale will go to the estate, not to the bank.
I have limited income, so I won’t quality for a Reverse Mortgage.
Traditional mortgages do require income and credit qualifications, as well as monthly mortgage payments. However, a Reverse Mortgage generally does not use income as a factor of credit. Many seniors who don’t qualify for a traditional mortgage may be eligible for a Reverse Mortgage.
If I get a Reverse Mortgage, the bank will own my home.
You will always retain ownership of your home. You can sell your home at any time, and your home will not be foreclosed on as long as you continue to live in your home and maintain your property taxes and insurance.