A Reverse Mortgage will cause me to lose my home.
Your home will not be foreclosed on as long as you continue to live in your home as your primary residence, pay property taxes, homeowner’s insurance, HOA dues (if applicable) and maintain the home according to Federal Housing Administration (FHA) requirements.
Taking out a Reverse Mortgage means that my heirs won’t inherit anything.
Your heirs or estate only pay back the balance on the Reverse Mortgage. That balance consists of the money you used in the program and the accrued interest on that amount. You have control over how much equity you use up.
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 qualify 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.
A Reverse Mortgage puts a lien on your property, but you can sell your home at any time.