Myth: “The bank will get ownership of my home if I get a reverse mortgage.”

 

FACT: The borrower retains title to the property. The reverse mortgage lender is merely extending a loan to the borrower secured by the home / property. Because ownership of the home is retained, the borrower is responsible for the payment of property taxes, insurance and home maintenance.

 

 

Myth: “The bank will get my home when I pass.”

 

FACT: Borrowers can leave their home to their heirs. When the borrowers pass away, the heirs may either pay the balance due on the reverse mortgage (principal plus accumulated interest and MIP) and keep the home, or sell the home and use the proceeds to pay off the reverse mortgage. If they sell the home, any remaining equity after the reverse mortgage is repaid is theirs to keep.

 

 

Myth: “I could get forced out of my home.”

 

FACT: FHA/HUD reverse mortgages specifically state that you cannot be forced out of your home. The only requirements of a reverse mortgage are that you continue to keep your home as your primary residence, in a good state of repair, with property taxes paid and insurance coverage in place, and up to date on any HOA dues (if applicable)

 

 

Myth: “If I owe more on the loan than my house is worth, I will leave a debt burden to my heirs”

 

FACT: The FHA/HUD reverse mortgages is fully insured by the government and is a “non-recourse” loan. Through the Mortgage Insurance Premium payment that is part of the loan, borrowers are fully insured against ever owing more than the current fair market value of their home. Debt cannot be transferred to the family members or heirs.

 

 

Myth: “My Government Benefits (Medicare and Social Security) will be affected by a reverse mortgage.”

 

FACT: Reverse mortgage payments should not affect Medicare or Social Security benefits. Additionally, reverse mortgage payments should not affect Social Security Income (SSI) benefits or eligibility as long as any reverse mortgage advances are spent within the month they are received (Consult your Social Security, Medicare or other financial advisor to determine how reverse mortgage payments may affect your particular situation).

 

 

Myth: “I can’t qualify for a reverse mortgage if I have an existing mortgage, or other real estate secured debt.”

 

FACT: Even if you have an outstanding first mortgage, or some other real estate liens (i.e. a home equity loan, tax lien, etc.), you still may qualify for a reverse mortgage. The proceeds of the reverse mortgage must first be used to pay off such debts however. This is a significant benefit as many borrowers use a reverse mortgage loan simply to eliminate their mortgage or home equity loan payments.

 

Myth: “A reverse mortgage is similar to a home equity loan.”

 

FACT: A home equity loan will require that you make regular monthly payments, whereas a reverse mortgage loan does not require monthly mortgage payments (borrowers must remain current on taxes, homeowner’s insurance and HOA dues as applicable).