When working with clients, I hear this all the time, "but someone told me." There are so many brother-in-laws and next door neighbors that have a lot of good advice and knowledge, but reverse mortgages might not be their specialty. Following are four of the most frequent myths I would like to bust wide open.
1. The lender will take my house.
False – You retain full ownership of your home just like you do right now. The reverse mortgage will sit on your preliminary title report just like any other mortgage lien. The reverse mortgage will be in effect until you sell the home, move out permanently for more than 12 months or the last surviving borrower passes away. Upon the passing of the last borrower the heirs would either keep the home and pay off the loan or sell the home. The best part is that you and your heirs keep all remaining equity.
2. I can be thrown out of my home.
False – You can never been thrown out of your home for non-payment because there are no mortgage payments on a reverse mortgage. The reverse mortgage does require you to continue to pay your homeowner insurance and property taxes. If this should become a problem some states do have assistance programs.
3. I can owe more than my home is worth.
False – All FHA Reverse Mortgage loans are considered non-recourse, which means that you and your heirs will never owe more than the value of your home. The home stands for the debt.
4. My family will be against it.
False – In my experience this is not the case. I have sat down with many families and their main concern is that their loved one is not being taken advantage of, and once they understand the benefits and safeguards involved, most are pleasantly surprised.
Reverse Mortgage for Purchase is Finally Here
Why would a homeowner that has lived in their home for years want to move? Many seniors are living in homes that they can not age in. Maybe they live in a two-story, their home is too much to maintain, not close enough to family or too far from a hospital or good medical care. Most seniors do not want to go into nursing facilities. They would rather stay at home, and when they need extra care, most would rather get help from family or in-home care.
Mortgage lenders are having a harder time qualifying clients for home loans, especially the senior client on a fixed income. A reverse mortgage could be the perfect loan to help you move. A reverse mortgage may even allow a buyer to move up to a higher price range than they anticipated and remain mortgage payment FREE with no income or credit qualifications. I can approve a buyer over the phone or in person in less than five minutes, providing that the property qualifies.
