Myths About Reverse Mortgages

Let’s explore some myths about reverse mortgages, a type of loan that’s like a special tool for people over 62 to get some cash from the value of their homes. Let’s dive into the real deal behind these myths and learn what’s actually true!

1. Myth: The bank owns your home.

  • Truth: Nope! If your grandparents get a reverse mortgage, they still own their home. The bank just has a promise (called a lien) that says they get paid back later.

2. Myth: You have to pay the bank every month.

  • Truth: Actually, it’s the opposite. You don’t have to pay the bank each month. You do have to keep paying for things like property taxes and insurance, though.

3. Myth: Your family will have to pay back the loan.

  • Truth: The cool part is, if the home isn’t worth enough to pay back the loan when it’s sold, your family doesn’t have to cover the rest. It’s what’s called a “non-recourse” loan.

4. Myth: You can’t get a reverse mortgage if you still owe money on your house.

  • Truth: You can still get a reverse mortgage if you owe some money on your home, but you’ll need to use some of the loan to pay off the old mortgage.

5. Myth: Lenders just want to sell your house.

  • Truth: Not true! The goal isn’t to sell your house. You can stay as long as you like, as long as you follow the loan rules.

6. Myth: You won’t have anything to leave to your kids.

  • Truth: There could still be money left from your home’s value to leave to your family, especially if your home’s value goes up over time.

7. Myth: You can’t sell your home if you get a reverse mortgage.

  • Truth: You totally can sell your home whenever you want. Just like with any mortgage, you’ll use the money from the sale to pay off the reverse mortgage first.

8. Myth: If your lender changes, your loan terms can change.

  • Truth: The terms of your loan stay the same, even if your lender changes. The deal you get at the beginning is the deal you keep.

9. Myth: Reverse mortgages are super expensive.

  • Truth: While there are some costs, like with any mortgage, they’re not much different from the costs of a regular mortgage. Plus, you can roll these costs into the loan.

10. Myth: Reverse mortgages are a last resort.

  • Truth: Actually, a reverse mortgage can be a smart financial move. It can help you have more cash flow in retirement and even help with buying a new home.

So, What’s the Big Picture?

Understanding the myths about reverse mortgages and knowing the truth allows our clients to make the right choice. It’s a way for people over 62 to use the value of their home to help with their cash needs without having to sell their home or make monthly loan payments. And, it can be a pretty smart move for some, giving them more freedom in retirement.

Before jumping in, it’s always a good idea to talk it over with family and maybe a financial advisor to make sure it’s the right move for you. Knowledge is key, and now you’re armed with the truth to make informed decisions about reverse mortgages. Remember, the future is bright, and understanding your options can help you make the best choices for your golden years!