Are you considering a reverse mortgage but unsure of what's true and what's a myth? Discover the facts and bust the myths about this financial tool!

 

A reverse mortgage is a loan that allows homeowners who are 62 years of age or older to access the equity in their home in the form of cash. Most reverse mortgages, known as Home Equity Conversion Mortgages (HECMs), are only available through FHA-approved lenders. Reverse mortgage proceeds can be used for a variety of expenses, including long-term care or in-home nursing costs. While there are no required mortgage payments on a reverse mortgage, homeowners are still responsible for paying taxes, insurance, and homeowners association dues. The loan does not need to be repaid until the last surviving borrower permanently leaves the home or passes away, as long as all loan terms are met. The Consumer Financial Protection Bureau has more information on their website.

 

There are several myths surrounding reverse mortgages, including the idea that you can only use a reverse mortgage to pay off a current mortgage if the proceeds are sufficient to do so, that you will lose your home and be forced to move, that you will have to give up the deed to your home, and that your children could be stuck with a large mortgage debt if you live for a long time. In reality, you can use a reverse mortgage to pay off a current mortgage, you cannot be forced to sell your home or move as long as you meet the loan terms (such as living in the home as your primary residence and maintaining it), the deed to your home will always stay in your name and you will retain all rights to the home, and your children cannot be held responsible for any amount over the value of the home. The Federal Housing Administration's Mutual Mortgage Insurance Fund (FHA/HUD) covers any losses.

 

While a reverse mortgage may not be right for everyone, it is important to consider all financial planning options and gather all relevant information before deciding. It is recommended to speak with a reverse mortgage planner to determine if it is a suitable option.