Myths vs. Facts
Though reverse mortgages have been available since the 1960's, they did not gain in popularity until the 1990's. Their quick uptake in popularity left them subject to misunderstanding and confusion. This is a snapshot of some of the myths about reverse mortgages.
Myth – Your lender takes the title to your home
FACT – You still own your home. The title remains in your name. When your home is sold or you move away, the loan must be repaid, but the title is never negotiable.
Myth – Reverse mortgage borrowers owe more than their home is worth.
FACT – The revers mortgage loan is a non-recourse loan, which means the borrower can never be personally liable for more than the home’s value.
Myth – I cannot get a reverse mortgage if I have a mortgage on my home.
FACT – A reverse mortgage can pay off your current mortgage, eliminating any monthly mortgage payment you have. You must remain current on taxes and insurance.
Myth – There are limits on how I can spend the money from my reverse mortgage.
FACT – You can spend your tax-free proceeds from your reverse mortgage any way you would like. The choice is yours.
Myth – My children will be responsible for the repayment of the loan.
FACT – If the property is sold to pay off the loan when you pass away or decide to leave the home, there will be no mortgage debt for your family or heirs to repay. The maximum amount owed is the current market value of the house. If your family or heirs wish to keep the home, they will pay the balance in full to the reverse mortgage lender.
Myth – Only low-income seniors get reverse mortgages.
FACT – Seniors from all different income levels decide if a reverse mortgage is right for them. For some seniors it is a way to eliminate their monthly mortgage payment and have more financial freedom. For others it is a way to have a financial cushion. Some seniors are able to live out their retirement more comfortably, and not worry about how they will make ends meet. A reverse mortgage is not designed for one particular person; it’s for any seniors looking to make the most out of their retirement.
Myth – If I outlive my life expectancy, the lender will evict me.
FACT – You cannot be evicted, as long as you continue to maintain your home and pay the property taxes and insurance fees.