Reverse Mortgage Myths & Facts

The Reverse Mortgage was designed for retiring homeowners aged 62 and older. In 1988, President Reagan signed the act that created the FHA-insured program. The President knew that, in the future, the country would need a program that could assist seniors with maintaining or enhancing their lifestyle. In today's world, it has been shown that Americans aged 62 and older do need financial help in order to retire.

Each day 10,000 individuals are turning 65 years of age. This is rapidly adding to the already robust population of 42 million seniors. Each month 8,000 seniors are applying for a reverse mortgage.They understand that life is full of uncertainty and the reverse mortgage can help secure their retirement.

Among the benefits offered by the reverse mortgage, seniors are able to eliminate their monthly mortgage payment, make use of their homes equity to either receive cash and/or supplement their income. Perhaps doing a reverse mortgage could prove to be very helpful for you in your retirement years. Have myths, or not having all the facts, prevented you from enjoying its benefits?

What is a Reverse Mortgage?

A reverse mortgage is a special type of home loan that allows you to turn a portion of your home's equity into cash, receivable in a variety of ways. Unlike traditional mortgages, no repayment of the loan is required until the last borrower(s) have permanently left the home. Reverse mortgages are all about making the most of the equity that you have acquired in your home. Does it make sense to do a reverse mortgage? It is important to have reverse mortgages explained to you, before you make a final decision.

               NBC Today Show- The Pros and Cons of a Reverse Mortgage

Benefits of a Reverse Mortgage:

• The loan is a government insured, FHA product
• Allows you to continue to live in your home
• You retain ownership of your home, providing you continue to pay the property tax and insurance
• Make no monthly mortgage payments anymore
• There are no income, credit or health qualifications
• Make use of the equity in your home by converting it into income
• You decide how you wish to receive your cash disbursements
• Tax free loan proceeds
• Repay the loan at any time without penalty if you choose

Common Myths about Reverse Mortgages:

Myth: The bank can take the home.
False! By the terms of the reverse mortgage, you retain the title to the home. There is no way you can be forced out of your home.

Myth: The home must be owned free and clear to qualify.
False! As long as you have equity in your home, you may qualify.

Myth: At the time that a reverse mortgage is due, the bank will sell the home.
False! The borrower or the borrowers heirs are in control of the home and title. At that point the home can either be sold or refinanced by an heir.

Ways to Potentially Use your Money:

• Invest in long-term care insurance
• Supplement retirement income
• Pay property taxes
• Cover medical expenses
• Make home repairs or improvements
• Pay for in-home care
• Pay off your existing mortgage
• Take a trip, buy a car
• Give it to your heirs and watch them enjoy it