Common Misconceptions About Reverse Mortgages

Published On: May 7, 2024295 words1.5 min read
  1. Reverse mortgages are a scam: Today’s reverse mortgages are highly regulated by the State and Federal government ensuring borrower safety.
  2. You will lose ownership of your home: Today’s reverse mortgages ensure you retain ownership of your home, and you have the right to live there forever if you meet the loan requirements, such as maintaining the property and paying property taxes and insurance.
  3. You can owe more than your home is worth: This is a mathematical possibility with a reverse mortgage, as property values can vary, and the loan balance grows over time with interest. However, the FHA-insured Home Equity Conversion Mortgage (HECM) and other reverse mortgage programs have protections in place to prevent borrowers from any responsibility beyond the value of the home.
  4. You won’t be able to leave your home to your heirs: While a reverse mortgage can impact the inheritance you leave to your heirs, they have the option to repay the loan balance and keep the home or sell the property and keep any remaining equity.
  5. Reverse mortgages are only for desperate or financially struggling seniors: Reverse mortgages can be a useful financial tool for seniors who are looking to: drop their mortgage payment, supplement their retirement income (tax free), pay-off debt, pay for in-home care, or make home improvements. It is important to carefully consider your financial goals before deciding if a reverse mortgage is right for you.
  6. Your home needs to be paid-off to get a Reverse mortgage: Not true, 50% loan-to-value is the typical limit depending upon the age of the borrowers.
  7. You’ll get kicked out if the property value drops: Not true, reverse mortgages are considered lifetime mortgages, not tied to fluctuations in the value of the home.

Call me with questions about Reverse mortgages.

Summit Mortgage

For expert advice and tailored mortgage solutions that fit your unique needs, contact Summit Mortgage today!

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