Misconceptions About Reverse Mortgages

By Owen Coyle, Market Mortgage

MISCONCEPTION #1: “IT’S TOO GOOD TO BE TRUE”.
THE TRUTH: The money is provided by Fannie Mae and is federally insured by the U.S. Federal Government (FHA). This program is made available from HUD-approved lending institutions. This “Government Insured Program” is 100% safe!!!

MISCONCEPTION #2: “THE LENDER OR GOVERNMENT WILL TAKE MY HOME”
AFTER I DIE”
THE TRUTH: The homeowner remains the owner of the home, title does not change. After the homeowner dies, the home goes to the heirs. The title and the responsibilities of home ownership stay with the homeowners; they must pay the property taxes and homeowners insurance and take reasonable steps to maintain their property.

MISCONCEPTION #3: “I CAN OWE MORE THAN MY HOME IS WORTH”.
THE TRUTH: The homeowner or their heirs can never owe more than the value of the home. Even if you live to be 100, and when you move out, sell your home or pass away, the real estate market is at an all time low, you still cannot owe more than the value of the home. Bankers call this a “non-recourse loan”, meaning that your Reverse Mortgage can never leave your heirs in debt.

MISCONCEPTION #4: “I CAN BE FORCED TO MOVE OUT OF MY HOME”.
THE TRUTH: The homeowner can stay in their home “FOREVER”.

MISCONCEPTION #5: “MY CHILDREN WILL OBJECT TO REVERSE MORTGAGE”.
THE TRUTH: Experience shows that the children are strongly in favor of their parents getting a Reverse Mortgage and enjoying all the benefits it creates. It is a reward for many years of home ownership. The children of every one of my clients were 100% in favor or the Reverse Mortgage.

MISCONCEPTION #6: “IF I HAVE AN EXISTING MORTGAGE, I CAN’T GET
A REVERSE MORTGAGE”.
THE TRUTH: The existing mortgage is paid off with the available Reverse Mortgage funds.