5 Reverse Mortgage Myths Debunked!

5 Reverse Mortgage Myths Debunked!

The reverse mortgage industry has a bad rap when it comes to the press and there are plenty of myths and misconceptions surrounding this program. Today, we debunk some of the most popular myths about reverse mortgages to help clear the air.

Myth #1: You can lose your home in a reverse mortgage.

False. When you apply for a reverse mortgage, you still retain ownership and title of your home during the loan for as long as the last borrower is still living in the home. As long as you meet the requirements of the loan, the loan will not become due.

To prevent from your loan from becoming due, you must:

• Maintain upkeep of the property.
• Continue to pay property taxes and homeowner’s insurance.
• Live in the home as the primary residence.

Myth #2: You must have good credit and good credit standing to qualify for a reverse mortgage.

False. Reverse mortgages currently does not have a credit score requirement, however, lenders will look to see if you have outstanding government or tax debt. To qualify for a reverse mortgage, at least one of the borrowers must be 62 years of age or older, you must have sufficient home equity and the property must be your primary residence.

Myth #3:  The home must be paid off or debt-free to qualify.

False. Reverse mortgages takes the equity from the home and converts it into cash. As long as there is enough equity, the homeowner may be eligible for a reverse mortgage. Many seniors use their reverse mortgage loans to pay off existing mortgages.

Myth #4: You will be taxed for taking out a reverse mortgage.

False. Because reverse loans are considered to be loan proceeds and not income, the reverse loan is not taxable income. However, please contact your tax advisor for further tax information or concerns.

Myth #5: Reverse mortgages cost more than you can receive.

False. It is true that reverse mortgages can be expensive, especially due to the mortgage insurance that is there to protect the borrower and the lender. HOWEVER, it is possible for most of the costs to be rolled into the reverse mortgage loan, which means that the only out-of-pocket cost that you have to pay would be the HECM Counseling session. A benefit of having a reverse mortgage loan means that you do not have to make monthly payments unlike other loans.

If you want to learn more about Reverse Mortgages you can speak with an advisor at 1-888-808-8486.

 Read Related Articles:

Debunking Another 5 Reverse Mortgage Myths

 Reverse Mortgage Facts

About the Author:

I have been working in the reverse mortgage industry for 20-plus years. My goal is to provide consumers the most up-to-date and relevant information about the reverse mortgage industry and how it can affect them.

Thanks so much for reading!

-Alan F.

Image courtesy of [Danilo Rizzuti] / FreeDigitalPhotos.net