Reverse mortgages have a long and rich history, and over time they’ve evolved and improved. Today they are used by hundreds of thousands of seniors who want to create better lives for themselves and their families.
Unfortunately, many people are missing out on the many benefits of reverse mortgages because of these certain misconceptions and myths that are still attached to them.
Let’s cover some common reverse mortgage myths, and debunk them for good.
Reverse Mortgage Myths
Myth: I must have zero debt on my home to qualify for a reverse mortgage.
Truth: 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 and eliminate your mortgage payments forever!
Myth: I’ll be living off of debt with a reverse mortgage.
Truth: A reverse mortgage converts your equity into cash. The entire concept is about being able to make money on your home and live in it at the same time.
Myth: My lender has the right to sell my house when the reverse mortgage loan becomes due.
Truth: The lender does not have the right to sell your house. The loan only becomes due when you no longer live in your own home.
Myth: My loved ones will be responsible for paying for the loan when I pass.
Truth: Reverse mortgage loans are non-recourse loans. Your lender can only recoup his investment after the sale or refinancing of the home and you will never owe more than the value of your home when the loan is paid.
Myth: Only people who are struggling financially apply for a reverse mortgage.
Truth: Many seniors do apply for a reverse mortgage to help with their finances and get them out of a financial bind, but many other seniors get reverse mortgages to make more money, to keep their savings in tact longer and to even out their spending over time.
Don’t let reverse mortgage myths scare you away. A reverse mortgage isn’t just a life preserver – it’s a great addition to a retirement plan no matter what your financial state is.