Have you ever heard the phrase that “bad news travels fast” and then personally experienced that at some point in your life? Well, if you haven’t yet experienced it, you are now because there are so many Myths and Misunderstandings about the Reverse Mortgage.
Reverse Mortgage Myths
- You immediately sign over ownership to your home.
- It’s only for broke people.
- It’s free money.
Reverse Mortgage Facts
- You retain title to your home as long as you meet the loan guidelines & requirements such as: maintaining the property, paying all property charges such as property taxes, homeowners insurance, flood insurance, and homeowners association dues (if applicable), and avoiding extended absences from the home longer than six months.*
- Many retirees use a reverse mortgage.
- It’s a specialized loan. However, program rates, fees, terms, and conditions are not available in all states and are subject to change.
- Failure to comply with the loan terms could result in a foreclosure.*
- Reverse mortgages that are FHA-insured (Home Equity Conversion Mortgages) are insured by the Federal Housing Administration providing protection for both borrowers, lenders and beneficiaries.
* There are some circumstances that will cause the loan to mature and the balance to become due and payable.* The borrower is still responsible for paying property taxes, homeowner’s insurance and maintaining the property to HUD standards. Failure to do so could make the loan due and payable.* Credit is subject to age, income standards, credit history, and property qualifications.* Program rates, fees, terms, and conditions are not available in all states and subject to change.* Borrowers should seek professional tax advice regarding reverse mortgage proceeds.
Now I know you’re asking, then why wouldn’t everyone over age 62 consider the HECM? The answer is they should! The problem is the lack of education out there in the marketplace for what really are Myths and Facts. I’d recommend everyone over 62 consider this option, unless they plan to not be in their home for at least the next 2-3 years then it may not make sense. Often I meet with my clients and their financial advisors together so they can see how the heck the HECM can save them money in retirement so they can live the retirement they’ve always dreamed of.