Myths and Facts About Reverse Mortgages
Some families are afraid to apply for reverse mortgages because they think they can potentially lose their home. A reverse mortgage WILL NOT take your home.
The professionals at Z Reverse Mortgage will make sure you have all the facts, so that you can make an informed decision.
MYTH: The lender can tell me how I can spend the money.
FACT: The funds you receive from a reverse mortgage are controlled only by you. You can use them in any way you see fit.
MYTH: If property values change, I can end up owing more than my home is worth and could potentially lose the home.
FACT: You cannot lose the home because of property value, and you will not owe more than the home is worth. HECM reverse mortgages are part of a government-insured program. Because it is insured by the FHA, the federal government will pay the difference if property values change.
MYTH: I won’t be able to receive Social Security of Medicare payments anymore.
FACT: Payments from a reverse mortgage are not taxable or considered income. They will not affect your Social Security or Medicare payments. If you are receiving other types of government aid, you should discuss them with your Z Reverse Mortgage advisor, so that we can make sure they will not be affected.
MYTH: I have to own my home outright if I want to do a reverse mortgage.
FACT: Owning your home is not necessary to apply for a reverse mortgage. However, you will need enough equity in the home that the proceeds from the reverse mortgage can cover the remaining mortgage payments. Generally, you will need around 50% equity in your home. The professionals at Z Reverse Mortgage can help you determine if you possess enough equity to apply for a reverse mortgage.
MYTH: My debt will transfer to my children.
FACT: A reverse mortgage will not transfer debt to your children. Once you pass away, your children will have the option to pay the balance of the loan to keep the house, or they can work with the bank to sell it. If they do not want to keep the house, they will not have to pay back any portion of the loan and will be given no debt. Once the house is sold, they will receive a portion of the earnings if there was any remaining equity.
MYTH: The lender can kick me out of my home.
FACT: As long as you continue to pay your taxes and insurance payments, the lender CANNOT kick you out of your home. As long as you live there, you are still the owner of the home.
MYTH: I won’t be the legal owner of my home.
FACT: You will retain the title to your home for as long as you are living there. A reverse mortgage does not give ownership of the home to your lender. However, once you are no longer living there, you or your heirs will have to pay the full balance of the loan or work with the lender to sell the property.