Reverse Mortgage Myth vs Fact
Myth: I could lose my home with a reverse mortgage.
Fact: While you are living in your home, you are not responsible for making mortgage payment or paying off the loan. You will continue to retain ownership and the title to your home as long as you live in your home, maintain it as your primary residence, and continue to pay property taxes, insurance and homeowner’s association fees.
Myth: The lender owns my home.
Fact: The lender is not on title. You own your home and homeowner’s name is the only ones on title. A lien is place on the home similar to any other mortgage. The homeowner remains in control of the property.
Myth: I must make monthly payments on my loan.
Fact: The choice is yours! Homeowners who choose to obtain a reverse mortgage may elect to make their monthly payment or they may elect NOT to make their monthly mortgage payments. Borrowers must continue to maintain the property, pay property taxes, pay for insurance, and make any homeowner’s association payments, if applicable.
Myth: A reverse mortgage is for low-income homeowners.
Fact: There are no income limits for a reverse mortgage. Homeowners from various income levels may utilize reverse mortgages. A reverse mortgage can be used for many reasons such as retirement planning, as a financial cushion to make funds available for travel, home improvements, or other benefits.
Myth: I will not be able to leave my home to my heirs.
Fact: You CAN leave your home to your heirs. As long as you pay your property taxes, insurance, homeowner’s association fees, and maintain your home, you retain title of the property and can leave it to your heirs. Your heirs will never owe more than the value of the home. If they wish to keep the home, they can simply pay off the loan balance. Or if your heirs elect to sell the home, they can pay off the loan balance and keep the remainder of the proceeds.
Myth: Proceeds from a reverse mortgage are subject to income tax.
Fact: Proceeds from a reverse mortgage are not considered income and generally are not taxable. Interest paid on the loan is tax deductible. Please consult your tax specialist for further details.