Reverse Mortgage Fact or Fiction
Reverse mortgage fact or fiction: How much do you know about reverse mortgages? Read a statement below and see if you know if it is true or false. Then click on the plus sign to the left to reveal the answer. You might be surprised!
Reverse mortgages are only a good idea for seniors who are cash poor
While some seniors may clearly have greater financial need, a reverse mortgage can be an excellent estate-planning tool for any senior that has substantial equity in their home.
A reverse mortgage would end up being a burden to my kids
In fact, many people choose to take out a reverse mortgage to take care of themselves, relieving their children of the need to take care of them or pay their long term care bills!
I need a steady income to qualify
There are no income requirements. In fact, many people use a reverse mortgage to help them pay their bills!
I need to be debt-free to qualify
There are no credit requirements.
I still have a loan on my home, so I won’t qualify
If you have enough equity, the proceeds of the reverse mortgage loan can be used to pay off the debts.
When I take out a reverse mortgage, the lender will own my home
The lender’s interest is limited to the loan balance, and they will NEVER take control of the title. You and your heirs/estate retain ownership of the home, just as with a normal house loan.
When I get a reverse mortgage, it will lower the amount I get my pension, Social Security or Medicaid
A reverse mortgage will not affect most means-tested benefits. However, be sure to check with your local area agency on aging. Programs vary by state.
Having a reverse mortgage increases the taxes I owe
All the cash you get from your reverse mortgage is tax-free, because the funds are considered borrowed.
If the amount of my reverse mortgage loan ever exceeds my home’s appraised value, someone will have to pay up the difference--either me or my kids
A reverse mortgage is considered a non-recourse loan, which means you’ll never owe more than your home’s value, regardless of the loan balance.
Bad health disqualifies me
There are no health requirements. In fact, many people use a reverse mortgage to pay for health care or long term care!
If the bank sells my reverse mortgage loan to another bank, the terms of my loan may change
At the closing of your loan, you’ll sign a contract that says your loan’s terms cannot be changed, regardless if the loan is sold.