1. If I have a reverse mortgage I can lose my home and all of my remaining equity to the government or the bank.
False: A reverse mortgage is only a lien on your home. You still own your home. When you leave the home, the loan balance is repaid in full with the remaining equity passing to you or your heirs.
2. A reverse mortgage will use up all of the equity in my home and there will be nothing left for my heirs.
False: Because you still own your home, and because it will continue to appreciate in value, it is very difficult to use up all of your equity. In fact, in many cases, depending on how much money you use, the amount of equity you have may increase.
3. Selling my home is always better than doing a reverse mortgage.
False: Not necessarily. If you sell your home, you may lose one of the largest and most secure investments you probably have. You may forfeit up to 10% of your home’s equity in sales costs alone. After selling, you may have to pay rent or some other type of monthly payment that would eat away at your savings. For most seniors, moving from their home is physically and emotionally difficult.
4. Reverse mortgages are all the same, so I don’t need to shop lenders.
False: While it may be true that most reverse mortgages are very similar, not all reverse mortgage lenders are the same. To thoroughly understand all of your options, you need a lender with experience. You want to work with a lender that is helpful, knowledgeable, and professional - one that doesn’t try to pressure you.
5. I already have a mortgage, so I won’t qualify for a reverse mortgage.
False: You can use the reverse mortgage to pay off the balance of your current mortgage or equity loan. By doing so, you will “free up” the money you used to use for monthly payments on the old loan.
6. I have bad credit, so I won’t qualify for a reverse mortgage.
Not necessarily. There are limited credit, income, and asset requirements to qualify for a reverse mortgage. If you are 62 or older and you own your home – you may qualify.
7. Reverse mortgages are more expensive than traditional loans.
False: Even though a reverse mortgage has up-front costs that are folded into the loan, there are NEVER any monthly loan payments and the loan is insured by the U.S. Government to protect you over your lifetime. You only pay property taxes and home insurance. Other types of home financing that have monthly payments do not offer this level of financial safety and security.
8. I have to fix up my house to qualify for a reverse mortgage.
False: Your home doesn’t have to be in perfect shape, however if there are minor repairs that are required by the lender, they can be done after the closing in most cases.
9. A traditional mortgage loan with monthly payments costs less and is always better than a reverse mortgage.
False: A traditional (forward) loan with monthly payments may work well in some circumstances, but when you consider all of the monthly payments paid out on a traditional loan over time, you see that the overall cost of a reverse mortgage is not very different.
10. We are not eligible for a reverse mortgage because my spouse is not 62 years old yet.
False: While it is true that both borrowers must be 62 years or older, if one spouse is not 62, there are still strategies that can be employed that will enable you to obtain a reverse mortgage. These strategies can be very safe and practical.
Still have questions? Call us at 1-800-720-7003