People get reverse mortgages for all kinds of different reasons. Part of their overall financial plan is they no longer want to make a monthly mortgage payment, or they want to create additional cash flow or pay off debts. The reasons to get a reverse mortgage are as diverse as the people getting them. Yet there are countless people that could benefit tremendously from a reverse mortgage but won’t even consider it because of these common misunderstandings.
Misunderstanding: You Must Give Your Home’s To The Bank.
You remain fully vested on the title, not the bank. You are in full control and can sell or refinance your home.
Misunderstanding: The Bank Gets The Home When You Die.
The home will go to the estate. The estate will determine what to do with the home. Any remaining equity from the sale of the home goes to the estate.
Misunderstanding: You Can Outlive A Reverse Mortgage.
There is no term on a reverse mortgage or any balloon payments. The loan is active as long as you are living and the home is your primary residence.
Misunderstanding: I Could Owe More Than My Home Is Worth.
You can never owe more than what your home is worth. The FHA reverse mortgage is a non-recourse loan, which means, if the loan amount exceeded the home’s value, you, your heirs or your estate are not liable. The most you can ever owe is what the home is worth.
Misunderstanding: You Should Only Get A Reverse Mortgage If You Are Desperate.
In the past, reverse mortgages attracted the stigma that only desperate homeowners would get a reverse loan. Today’s senior homeowners are seeing the value that a reverse mortgage brings to their lives not only from a financial perspective but also in an increased quality of life.
Misunderstanding: You Need To Own Your Home Free And Clear In Order To Qualify.
You do not need to own your home free and clear in order to get a reverse mortgage. Many people get a reverse mortgage to pay off their current mortgage and free up monthly cash flow.
Misunderstanding: I May Lose Social Security Or Medicare Benefits.
A reverse mortgage does not affect Social Security or Medicare because the proceeds are a loan, not income. Some need based programs such as Medicaid may be affected.
Misunderstanding: I Can’t Use The Money The Way I Want To.
It is your money and you can use in any way you see fit. You could purchase long- term care or life insurance, supplement your income, pay for in-home care, pay your grandchildren’s education, remodel, or upgrade your home or anything else that makes sense to you.
Article Provided by: Matt Allen, MLO-254296 Pacific Residential Mortgage LLC
Equal Housing Lender