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Common Myths of Reverse Mortgage Loans

You can find below some of the many myths and misconceptions surrounding reverse mortgage loan industry. You can believe them, or you can read on and come up with a more informed decision.

Myth No. 1: The lender will own my home with my reverse mortgage loan.

This misconception is on top of the list for this industry for a very good reason: it is the most common misperception there is surrounding reverse mortgages. When you take out a reverse mortgage loan, you are still responsible for your own home – for maintaining it, using it to its limits, for paying property taxes and for paying home insurance fees. You can even sell it if you like.

Myth No. 2: My loved ones will pay for the loan.

Reverse mortgage loans are non-recourse loans. Your lender can only recoup his investment after the sale or refinancing of the home. You will never owe more than the value of your home when the loan is paid.

Myth No. 3: I must have zero debt on my home to qualify for reverse mortgage.

If you still have outstanding balances on your mortgages, a portion of the reverse mortgage loan can be used to pay for the existing loan. You can do what you want with the remaining amount.

Myth No. 4: Having a good line of credit and good credit standing is a pre-requisite to a reverse mortgage.

Your lender will not even look at your line of credit when going through your reverse mortgage application. It will only check if you have taxes and other government debts that are outstanding.

Myth No. 5: Only poor people apply for the reverse mortgage industry.

It is true that many seniors apply for reverse mortgages to help them tide over retirement. However, many seniors take out reverse mortgages for less desperate reasons. They use reverse mortgages to make more money, or to plan for their estate. A good number also do it as a buffer for future expenses.

Myth No. 6: I’ll be living on debt with reverse mortgage.

A house is actually a dead investment – you cannot make money on it until you take out a mortgage. With a reverse mortgage you are actually just converting your equity into tax-free cash. The entire industry is based on using your home to the limits, being able to make money on your home and live in it at the same time.

Myth No. 7: My lender is going to sell my house when the reverse mortgage loan becomes due.

This misconception is false, the loan only becomes due when you, on a permanent basis, no longer live in your own home. In most cases, this happens is when you have passed on. When this happens, your heirs pay the loan through a refinancing program or by selling off other assets. They can also sell the house and use sales proceeds to pay off the debt.

Visit www.ReversePurchase.BIZ for more information and to register for my next workshop!