Myths and Facts of Reverse Mortgages
Reverse mortgages have been around for over 30 years, yet there are still a lot of myths and misconceptions surrounding them. As a Reverse Mortgage Professional, it is my duty to provide you with the facts so that you can make an informed decision about whether a reverse mortgage is right for you.
Myth: Reverse mortgages are a scam.
Fact: Reverse mortgages are a legitimate financial product that is regulated by the government. They are insured by the Federal Housing Administration (FHA), which means that the government is backing the loan.
Myth: The bank takes ownership of your home.
Fact: You still own your home when you have a reverse mortgage. You are simply borrowing against the equity in your home, just like you would with a traditional mortgage. You continue to live in your home and maintain ownership until you decide to sell it or pass away.
Myth: You have to make monthly payments on a reverse mortgage.
Fact: You do not have to make monthly payments on a reverse mortgage. Instead, the interest on your loan accrues over time and is added to the balance of the loan. You can choose to make payments if you want to, but it is not required.
Myth: You can owe more than your home is worth.
Fact: The FHA has put safeguards in place to prevent this from happening. Your loan balance can never exceed the value of your home, even if the value of your home decreases over time.
Myth: You can't get a reverse mortgage if you have an existing mortgage.
Fact: You can still get a reverse mortgage if you have an existing mortgage. In fact, many people use a reverse mortgage to pay off their existing mortgage and eliminate their monthly mortgage payments.
Myth: You can't get a reverse mortgage if you have bad credit.
Fact: Your credit score is not a factor in determining whether you qualify for a reverse mortgage. Instead, the amount of equity you have in your home and your age are the primary factors that are considered.
Myth: You have to use the money from a reverse mortgage for specific purposes.
Fact: You can use the money from a reverse mortgage for any purpose you choose. Many people use the funds to pay for healthcare expenses, home repairs, or to supplement their retirement income.
Myth: You lose your right to your home when you get a reverse mortgage.
Fact: You still have the right to your home when you get a reverse mortgage. You can live in your home for as long as you like, and you maintain ownership until you pass away or choose to sell your home.
Myth: You can't get a reverse mortgage on a condominium or manufactured home.
Fact: You can get a reverse mortgage on a condominium or manufactured home, as long as it meets FHA standards. However, the rules regarding these types of properties can be more restrictive, so it is important to work with a lender who has experience in these areas.
Myth: Your heirs will be responsible for paying back the loan.
Fact: Your heirs will not be responsible for paying back the loan unless they choose to keep the home. If they decide to sell the home, the loan will be paid off from the proceeds of the sale. If the loan balance exceeds the value of the home, the FHA insurance will cover the difference.
