The Facts About RMs

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Many shy away from getting a reverse mortgage because of rumors or misinformation that they have heard. This is a great shame as this government backed financial tool can be the perfect solution for many seniors. Hopefully by dispelling some of the incorrect information you may have heard, you might consider a reverse mortgage as being something that could help improve your quality of life.

A reverse mortgage is available to any senior who is 62 of over, lives in a single family dwelling, or two-to-four unit buildings or even FHA-approved condominium. There must be no, or very little, mortgage left on the home. This type of loan is geared to unlock the equity in homes allowing seniors access to funds that they can spend virtually any way they like such as, supplementing pensions or social security, health care, paying for grandchildren’s college fees, vacations etc.

Many know of these benefits but are still afraid to apply to a reverse mortgage because of fears they have about loosing their home and that they are ineligible. Let’s clear up some of the most frequently misunderstood things about this type of loan.

After taking out the loan, the bank effectively owns my house

Not true. The title deeds always stay with the homeowner; the lender has no more right to your home than does anyone else. Even when the loan is due to be paid back (because it’s been sold, is no longer the principal residence or the borrower(s) have died) the lender still has no right to take possession of the property.

I won’t get a reverse mortgage because I have bad credit history

Bad credit history hardly ever stops anyone from being eligible: it is extremely rare for anyone to be denied a reverse mortgage because of a bad credit history. Only if you’ve defaulted on money owed to the government can it be a problem, but even then, it won’t necessarily make you ineligible. Remember, this type of loan doesn’t care about income or that you can ‘pay it back’, that’s because you make no repayments; instead the lender gives you money each month.

When I pay back the loan I have to sell my house

Absolutely not. The loan must be paid back when the house in no longer the principal residence, you sell it or you die and it must be paid back as one lump sum. But, it doesn’t matter where the money comes from. You or your heirs can sell the home, or your heirs can obtain a regular mortgage on it to repay the original loan back, or sell shares, or from wherever else the money can be found.

I can’t will my property to my heirs

Why not? As you still have the title deeds you can leave the house to whoever you like. True, the reverse mortgage will also be passed on to them, but they have the option of repaying it back anyway they choose.

My family will feel as though I’ve taken away their inheritance

As stated above the house can be willed to them. Would you rather they lost their inheritance because you had to sell your home to pay for your medical costs or home help as you get older? With a reverse mortgage, you keep the house and pass it on to your heirs. After your death, they don’t have to sell it to pay back the loan instead they can obtain a regular mortgage to finance paying back the reverse mortgage.

http://www.americanchronicle.com/articles/50379 — article