Myths of Reverse Mortgages
When you read about reverse mortgages there are so many differing stories and opinions. Some people say it’s the greatest program in the world, while others say it is a total scam. How do you know what to believe? Over the years we have helped make a reverse mortgage as transparent as possible to our clients in Scottsdale, Sun City and through out the Phoenix area. Here are some of the biggest myths about a reverse mortgage and what they really do.
You are selling your home to the bank
When you do a reverse mortgage you still own your home not a bank. Your name will remain on the title of the home. All that is done is that a lien is added to the title so the lender gets back the money it lent you as part of the reverse mortgage.
Your heirs will not inherit your home
Your heirs do inherit the home, but there is a lien on the title. That means the heirs will be responsible for the amount that was borrowed along with any interest on that loan.
Lets say that the total amount borrowed with the reverse mortgage was $50,000, and then you as the home owner were to pass and your heir sell the house for $250,000. What would happen is the lender would get $50,000 and their heirs $200,000.
You could be forced out of your home
One of the key points of a reverse mortgage’s stipulation is that the home owner can stay in their home as long as they live. Since you will no longer make any mortgage payments you don’t have to worry about foreclosure. The only requirement with a reverse mortgage is that you have to keep the home in good shape, pay the property taxes and keep up your home insurance policy.
There are a lot of up front costs
In most cases the appraisal fee and costs to finance the loan can be paid by the lender. Other then that the only other expense would be the required cost for counseling a prospective client has to take before getting a reverse mortgage.
These are just some of the myths that are associated with a reverse mortgage, so if there are any other questions on things you’ve heard about a reverse mortgage and you want the truth, then contact us and we will help you see the truth on what a reverse mortgage does.
