Misconceptions about Reverse Mortgages
A reverse mortgage can be a great financial product for individuals who can qualify and find that it fits their needs. With a reverse mortgage, there are no rules on how you can use the funds, therefore, many seniors are use it to gain the financial freedom that they are looking for in their retirement.
However, there are many individuals who are still unsure what a reverse mortgage is all about or how it works. Today, I will clarify some of the biggest misconceptions about reverse mortgages. The best way to protect yourself with a reverse mortgage or any other financial product is to educate yourself so that you have an understanding of your obligations and loan terms.
Top 5 Misconceptions about Reverse Mortgages
1. You are signing your home over to the bank.
FALSE. With a reverse mortgage, the bank does NOT own the home, whoever is on title still retains ownership of the property. This is a very common misconception, yet very untrue. A reverse mortgage will not change who owns the home, and you are free to live in your home comfortably, for as long as you want. However, you must be aware that you are still responsible for the property taxes and insurance on the home.
2. Reverse mortgages are only used as a last resort.
FALSE. Reverse mortgages do not only have to be used a last resort. Many financially stable seniors use their reverse mortgages as part of their financial plans for their retirement. Like I said earlier, there are no rules on how you can use it – some seniors have used it to enjoy their retirement to its fullest by going on vacations or buying a new car. You can also use it to help renovate your home or even buy a new home. (Read about Reverse Mortgage Purchase Product here.) Some Seniors also use their reverse mortgage as an opportunity to spend time with their loved ones by going on vacation or helping pay for their grandchildren’s college education. However you plan to use your reverse mortgage – it is up to you.
3. Your home needs to be free and clear, or you need lots of equity to qualify for a reverse mortgage.
FALSE. While there needs to be a substantial amount of equity in your home in order to take out a reverse mortgage, your home does not need to be free and clear nor do you need a lot of equity in the home. With your reverse mortgage loan, you are also able to use it to help pay off the existing mortgage on your home.
4. A reverse mortgage can reduce the amount you can receive from Social Security.
FALSE. This is a legitimate concern for many seniors, however, you can rest easy and find that because reverse mortgages are not considered taxable income – your Social Security benefits will not be affected.
To learn more about reverse mortgages and how they can benefit you – you can speak with an advisor at 1-888-808-8486.
Read Related Articles:
5 Reverse Mortgage Myths Debunked
Another 5 Reverse Mortgage Myths Debunked
Image courtesy of [Stuart Miles] / FreeDigitalPhotos.net
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