Reverse Mortgage Myths

7 Myths About Reverse Mortgage Loans

Despite being available for decades, reverse mortgage loans remain misunderstood by most people. Here are the seven most common misconceptions about reverse mortgage loans, along with the facts you should know.

 

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Myth #1 - The lender will own your home.

FALSE: You continue to retain ownership of your home. The lender does not take control of the title. Reverse mortgage loan borrowers may remain in the home for as long as they wish so long as all property charges remain current, the property continues to be the primary home and maintained and other loan requirements are met.  With lender approval, a borrower may hold title in a trust or life estate.  Please call us at 877-499-7283 to discuss your particular situation.

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Myth #2 - Your heirs must pay the loan back.

FALSE: A reverse mortgage is a non-recourse loan. The lender can only derive repayment of the loan from the proceeds of the sale of the property with you or your heirs retaining all of the equity. In the rare situation of the loan amount being greater than the home value (the home value being “upside down”), you or your heirs would owe nothing to the lender.

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Myth #3 - You need income, good credit, or good health to qualify.

DEPENDS: A reverse mortgage loan has no health requirements but recent guideline changes now require a financial assessment on the ability and willingness of the borrower to have sufficient cash flow to pay for all property charges and meet residual income requirements. The good news is there may be other options if one does not satisfy the financial assessment criteria. The key is to discuss your specific situation with one of our licensed professional and experienced reverse mortgage specialists.  Please call us at 877-499-7283 for more detailed information.

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Myth #4 - You have to make monthly payments on your reverse mortgage loan.

FALSE: There are never any monthly principal or interest payments required. However, you must remain current on all property charges such as real estate taxes and hazard insurance, maintain your home’s condition, and meet other ongoing loan requirements.

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Myth #5 - Your home must be debt free to qualify for a reverse mortgage loan.

FALSE: You may have a mortgage or other debt on your home when applying for a reverse mortgage. The mortgage will be paid off when you receive your reverse mortgage funds.

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Myth #6 - Only "cash poor" senior citizens can benefit.

FALSE: Not all seniors have a great need for immediate cash or want a monthly stream of cash. More and more seniors and financial planners are utilizing the availability of a reverse mortgage line of credit to augment existing retirement strategies.  A reverse mortgage is one way of having a financial safety net if faced with a life challenge.

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Myth #7 - A reverse mortgage is expensive.

DEPENDS: A reverse mortgage can cost more than a conventional loan. However, it is much less expensive than the moving costs and real estate commission of selling your home not to mention the emotional pain of relocating and the new monthly expenses of a new property! In some cases, the cost of a reverse mortgage may actually be less than traditional mortgage financing.  Th key is to contact us for a specific quote for your situation.

Direct Finance Corp. can help achieve the primary goal of many seniors – to improve the quality of life and remain financially independent at home! To learn how a reverse mortgage can help you please call us today at 877-499-7283. Or simply complete our easy-to-use web contact form.

These materials are not from HUD or FHA and were not approved by HUD or a government agency.

Interested in learning more about a reverse mortgage in Massachusetts, Maine, New Hampshire or Rhode Island? Call Direct Finance Corp. today at 877-499-7283. Or simply complete our easy-to-use web contact form.

These materials are not from HUD or FHA and were not approved by HUD or a government agency.

Reverse Mortgage Myths

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