“I can lose my home with a reverse mortgage”
Truth
As of 1989, the government set guidelines with FHA and HUD for
reverse mortgages, so that unscrupulous lenders do not take advantage
of senior homeowners. As the client you remain on title and
it is held in the same manner that it is currently. Title
may be held soley, jointly, or in a trust. As long as the
home is still the primary residence of one of
the borrowers the lender will never ask for the loan to be repaid.
“My heirs will be left with the burden, when the loan comes
due my heirs can owe more than the home is worth”
Truth
The loan is a NON-RECOURSE loan and the borrower can never owe
more than the value of the home. If the amount owed exceeds the
value of the home, borrowers are not responsible for the amount
of the mortgage that exceeds the value of the home. The lender
can only collect up to the sale price of the home. Heirs
are not left with a burden or outstanding balance.
85% of all heirs are in favor of a reverse mortgage. Many
times it reduces the burden on the heir since they no longer have
to worry about financially taking care of their parents.
“I may not qualify for social security if I receive all of
this money from a reverse mortgage”
Truth
The proceeds are not viewed as taxable income by the IRS. Therefore,
a reverse mortgage would not affect social security benefits.
“In order to qualify for a reverse mortgage you must have
the house paid off.”
Truth
You do not have to have the house completely paid off; in fact many
reverse mortgage clients obtain a reverse mortgage just to eliminate
their current monthly payment.
“Your house has to be in perfect condition; if it needs repairs
it is not possible to obtain a reverse mortgage.”
Truth
If your property does not meet FHA appraisal condition
it may required that the items be fixed. Most of the time
the repairs can be funded through the reverse mortgage proceeds
and the repairs can be made after the loan closes.
“Reverse mortgages are only for the poor.”
Truth
In fact studies have been done that show that most of the people
with a reverse mortgage have an income of over 50,000 dollars a
year excluding reverse proceeds. Many reverse mortgage clients
use reverse mortgages for estate and financial planning purposes.
“You must make monthly payments with a reverse mortgage.”
Truth
With a reverse mortgage the only thing that the borrower is required
to pay each month is the property taxes, homeowners insurance,
homeowners association dues, flood insurance (if in a flood area),
etc. There are no payments on the mortgage itself.
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