Reverse Mortgage Myths: The Truth Revealed About this Unique Financing Choice
Reverse mortgages were first developed to allow senior citizens to access their home equity without having to sell their homes. This unique home loan option differs allows seniors to live in their existing homes without mortgage payments while receiving either a monthly payment, lump-sum payout, line of credit or a combination of these. While reverse mortgages have great benefits for some seniors, like most financial contracts, they aren’t right for everyone. At Global Mortgage, we get to know each of our clients on a personal basis and gain an understanding of their financial status and financial goals to determine if reverse mortgage is a viable option. On this page, we’ll discuss common reverse mortgage myths and provide truthful, straight answers. We serve clients in Rancho Cucamonga, Upland, Ontario, Fontana, and surrounding California neighborhoods. If you are interested in exploring reverse mortgage, contact us today.
Reverse Mortgage Myth 1: My home will no longer be inherited by my dependents and loved ones.
Truth: A reverse mortgage is a contract in which the equity in your home is used as collateral against your loan. Your home will remain your property for the length of your loan – that is, until you move out or die. Once one of these two things happens, the remainder of your reverse mortgage loan becomes due. If your heirs and dependents would like to keep your home, they will be given the option to pay off the remainder of the loan and retain the property. Only in the even that your heirs choose not to pay off the loan will your home be sold to pay off the balance. It is important to note that even if your property is sold for less than the remainder due, the debt will be considered settled, and your heirs will not be held liable for the difference in cost.
Reverse Mortgage Myth 2: I could get forced out of my home.
Truth: If you fulfill your end of the reverse mortgage contract, you can live in your home, no matter how old you grow to be, until your death. You will be required to continue to pay for the upkeep and homeowner’s expenses at your property, such as property tax and homeowner’s insurance, but will not pay anything toward your mortgage. To maintain your obligation to reverse mortgage, you must also continue to live in your existing home as your primary residence. If you continue to adhere to these requirements, you cannot be forced out of your home.
Reverse Mortgage Myth 3: There are a lot of out-of-pocket expenses.
Truth: While there are out-of-pocket expenses to consider at the inception of a reverse mortgage, we can easily help you plan to use your loan to pay for them. Initial costs include the FHA mortgage insurance premium (MIP), title insurance and an origination fee. We can easily negotiate to include these fees within your loan contract, unless you choose to pay for them in cash at the start of your loan. You will need to pay a nominal fee for a counseling session with an FHA-approved counselor, however; this price cannot be negotiated within your contract. If you have questions about these costs, contact Global Mortgage for specifics.
Reverse Mortgage Myth 4: Reverse mortgage payments affect my Social Security and Medicare benefits.
Truth: Reverse mortgages can in no way affect the amount of money you receive from Social Security or Medicare. The federal government has several senior safeguards in place to ensure that these senior programs remain intact for seniors who consider reverse mortgage financing. In fact, many reverse mortgage borrowers choose reverse mortgage specifically because it can help supplement, but not decrease, these federal assistance programs.
Reverse Mortgage Myth 5: A reverse mortgage means monthly payments.
Truth: A reverse mortgage should provide you with additional monthly income, rather than cost you additional money each month. Reverse mortgage clients can choose to receive a monthly payment out of their loan or can choose to receive a lump-sum payout or line of credit. Seniors will no longer pay mortgage payments once their reverse mortgage contracts begin. They will, however, be responsible for monthly costs including private mortgage insurance, property taxes and other homeowner’s costs, such as general upkeep. A professional at Global Mortgage can carefully evaluate your monthly budget and expenses and help you envision how a reverse mortgage can supplement your income.
Learn More About Reverse Mortgage Today
It is important to take caution with all financial contracts you may consider. At Global Mortgage, we encourage our senior borrowers and their families to ask as many questions as possible to gain a full understanding of this financing option. We can dispel reverse mortgage myths while helping clients to consider the pros and cons of this option. If you live in Rancho Cucamonga, Upland, Ontario, Fontana, or surrounding California, we are ready to speak with you. Contact Global Mortgage today for a complimentary consultation.