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Colorado Reverse Mortgage - Fact or Fiction

CCOLORADO REVERSE MORTGAGE -- FACT OR FICTION

I would need a steady income to qualify.

FALSE -- There are no income requirements.

I would need to be debt-free to qualify.

FALSE -- There are no credit requirements.

My health would disqualify me.

FALSE -- There are no health requirements.

I still have a loan on my home, so I wouldn’t qualify.

NOT NECESSARILY -- You may still qualify. The proceeds of the reverse mortgage loan may be used to pay off the debts.

If I take out a reverse mortgage, the lender will own my home.

FALSE -- 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.

I can’t get a reverse mortgage loan without it affecting my pension, Social Security or Medicaid.

NOT NECESSARILY -- A reverse mortgage will not affect most means-tested benefits.

HOWEVER, be sure to check with your local area agency on aging since programs do vary by state.

I would end up owing more in taxes.

FALSE – All proceeds associated with a reverse mortgage are tax-free because they are considered borrowed funds.

If the amount of my reverse mortgage loan ever exceeded my home’s appraised value, I’d end up owing money.

FALSE: A reverse mortgages is considered "non-recourse" loan. That means you will never owe more than the home’s value, regardless of the loan balance.

My loan terms can change if my loan is sold.

FALSE – At the closing of your loan, you will sign a legal contract assuring your loan's terms cannot be changed, regardless if the loan is sold.

Reverse mortgages are only a good idea for seniors who are cash poor.

NOT NECESSARILY -- 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.

FALSE -- Borrowers have between six months to a year to pay off the reverse mortgage if they choose. The loan may be repaid by refinancing the existing reverse mortgage, or by selling the property. Any remaining proceeds would then belong to the heirs, or the estate.