My heirs or I could end up owing more than my home is worth.
False!  The great safeguard for Reverse Mortgages that they are non-recourse loans, structured so that the borrower or his estate can never owe more than the value of the home upon repayment.  The lender can only recover repayment of the loan from the proceeds of a refinance or sale of the property. In addition, the HECM (Home Equity Conversion Mortgage) products are insured by the Federal Housing Administration (FHA), an arm of the U.S. Department of Housing and Urban Development (HUD). If the property decreased in value and the loan amount was greater than the proceeds, the lender is paid the difference from the FHA Mortgage Insurance.

Reverse Mortgage proceeds will impact Social Security and Medicare benefits.
False!  A Reverse Mortgage will generally not affect regular Social Security payments or Medicare benefits. Depending upon the borrower’s situation, a Reverse Mortgage may affect benefits one receives, if any, from the Federal Supplemental Security Income (SSI) program, or state-administered programs like Medicaid. It is recommended that the borrower speak with his or her financial advisor and appropriate governmental agencies to see if they are in a financial situation that might be affected.

My home must be paid off to qualify for a Reverse Mortgage.
False! Reverse Mortgages convert home equity into cash. As long as there is sufficient equity in the property, you may be eligible for a Reverse Mortgage. In fact, many seniors use a Reverse Mortgage specifically to pay off their existing mortgage and eliminate the monthly mortgage payment.

Children want the home or don’t feel comfortable with a Reverse Mortgage.
False! Seniors are encouraged to talk with their children about Reverse Mortgages. Many baby boomers are faced with trying to plan for their retirement and pay for their children’s education. Often, the children of many seniors are happy that their parents have a financial solution available to help them live more independently and financially secure. If they do have questions, they are welcome to attend the Reverse Mortgage counseling sessions with the borrower if they would like.

The lender will own my home and can take it away from me.
False!  You retain ownership of your home throughout the life of the Reverse Mortgage. The lender does not take control of the title; their interest is only to the extent of the outstanding loan balance.  The Reverse Mortgage will not be called due until the home is no longer your primary residence.  You cannot, as a result of the Reverse Mortgage, be forced out of your home as long as property charges, such as taxes and insurance, are paid and the home is maintained in reasonable living condition.

[ Back to Top ]