If you mention reverse mortgages to someone, you will find some outdated beliefs or just erroneous information. To clear up the reverse mortgage myths out there, here are some of the most common misconceptions and more importantly, the facts:
MYTH: The bank owns the home.
FACT: Just like other mortgages, the owner remains on the title at all times
MYTH: Reverse Mortgages are expensive.
FACT: Similar cost to all FHA loans and borrower doesn’t have to make mortgage payments – That’s affordable!
MYTH: You can end up owing more than your home is worth.
FACT: FHA mortgage insurance covers any deficiency. This is a non-recourse loan which means other assets are not at risk.
MYTH: Borrowers have to pay cash for the home and then get a reverse mortgage.
FACT: A reverse mortgage can be used to purchase a home so a buyer doesn’t have to fund fully with cash.
MYTH: When the borrower dies, the bank will foreclose on the home.
FACT: Families of the borrowers have 6 months to sell or pay off the mortgage. There are even further extensions available and remember the goal is not for the bank to foreclose.
If you have other questions on reverse mortgages or have heard another myth you want to be clarified, call us today. We believe that senior citizens should be able to live comfortably and are happy to explore if a reverse mortgage is right for you.