Reverse Mortgage Misconceptions.
There are so many misconceptions about reverse mortgages out there right now, that I thought it would be prudent to address them.
Let me start by making a very simple statement. A reverse mortgage is just a loan. Just like any other loan you've ever had. You do use the title (deed) as collateral for the loan, but you still own the home.
1. The lender owns my home after a reverse mortgage takes place.
This is the most common misconception. The number of times that this is brought up is incredible. Normally it it said something like "Don't do a reverse mortgage, you will lose your house." Unfortunately this is creating a wave of people that hear it and believe it. But it is just not true. You own the home. Any equity remaining is yours or your heirs.
2. I can owe more on my home than it is worth, leaving excessive debt to my heirs.
There is no way to leave debt to your heirs. That being said, if there are any assets to an estate, your heirs will need to pay off the debts of an estate before they can realize the remaining assets. There are also provisions in a reverse mortgage that are safeguards against you owing more than the home is worth.
3. The lender or State at some point will take my home.
Lenders are not in the business of taking homes. They want you to pay your interest. That is how they make their money. If you do not pay your taxes or insurance however, you could find that you are in default. If your taxes are more than your budget allows, you might consider having them deferred. Oregon is a state that allows this, but not all do.
4. I can be thrown out of my home.
This is simply not true.
5. Reverse mortgages are for desperate seniors.
While reverse mortgages are for desperate seniors, and they work great for them, it is not just for them. Some of the great ideas I have seen are listed below.
- Be able to retire comfortably.
- Build an RV pad at kids home to be able to visit without intruding
- Buy a vacation/rental home.
- Pay for in home care.
- Remove mortgage payments.
- Hire a yard service to "keep up" the property.
There are many other ways to use the money. See our testamonials to see what other people have to say.
