Reverse Mortgage Myths

Many seniors will consider a Reverse Mortgage until a friend or relative says something like, “Don’t, they will take your house away.”

These fears are completely unfounded and unfortunately stem from the earlier versions (dating back to 1961) when Reverse Mortgages were 1^st started. However, today Reverse Mortgages are safe, effective, insured by FHA and guaranteed by HUD, the US Government.

MYTH #1: The Lender will own my home. This is the number one misunderstood fallacy about Reverse Mortgages. In fact, YOU always maintain full ownership of your home. You will always own your home and the lender will never take your home.

A reverse mortgage is similar to any other mortgage, in that when you move, sell or pass, the mortgage will then be satisfied. The security of knowing the loan is insured by FHA and backed by the US Government is comforting and gives you a layer of security that you and your home are protected.

MYTH #2: My heirs will be responsible for repayment of my Reverse Mortgage if I sell, move or pass. Incorrect. The beauty of a Reverse Mortgage is the non-recourse feature. This means you can never owe more than your house is worth, regardless how much you owe on your reverse mortgage.

Your loan is insured by the FHA and it is this reason you get the non-recourse guarantee. This non-recourse feature adds comfort to your heirs, since they will never be obligated to come out of pocket to satisfy your loan. Of course, most homes continue to appreciate and accumulate equity. Upon passing, your heirs can decide to refinance with a conventional mortgage and keep the home or they can sell the home and divide the remaining equity.

MYTH #3: People with less than perfect credit aren’t eligible. When you apply for a reverse mortgage you don’t have to worry about your credit scores. Credit score are not considered for a reverse Mortgage.

Credit issues can sometimes be embarrassing, but you never have that worry, since to qualify for a reverse Mortgage it is not a requirement. Under some circumstances you can even qualify for a Reverse Mortgage if you had a bankruptcy or are still in bankruptcy.

MYTH #4: You have to be debt free, you don’t qualify if you owe money on your home. This is incorrect. Most people are not debt free and most people owe some portion of their mortgage. It is not necessary that you own your home free and clear to qualify for a Reverse Mortgage.

If you have a mortgage now, the new Reverse Mortgage can pay off your existing mortgage and eliminate your monthly mortgage payment. If you have outstanding debt, you can use the additional proceeds to pay off that debt. It is up to you. Any excess monies can be used to do with what you want.

MYTH #5: Only desperate people get Reverse Mortgages. Not true. When Reverse Mortgages were first started, this seemed to be the general consensus. Now, there are several options and choices designed to fit almost any situation and circumstances. You are the one who finally decides how you want your money.

If your 62 years or older and you own a primary residence, you probably want to make use of a Reverse Mortgage. Contact a Sr. Lifestyle Specialist for more information and assistance in answering any other questions.

Northeast Financial Corp - 920 Lenmar Drive - Blue Bell, PA 19422
Office Phone: (610) 291-6415

Licensed Mortgage Banker in PA, NJ and FL