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Misconceptions About Reverse Mortgages

Learn the truth about some common misconceptions about Reverse Mortgages.

I could lose my home. With a reverse mortgage you retain ownership of your home and control of your title. You can remain in your home as long as you wish and cannot be evicted or forced to sell as long as you follow the loan guidelines; pay taxes and insurance; and maintain the home.

My children will have to pay back the loan when I am gone. A reverse mortgage is a “non-recourse” loan. This means the lender can only be paid from the proceeds of the sale of your home—if, and when, you decide to sell. When the home passes on to your heirs, the lender is paid from the proceeds and your heirs retain any additional equity that has accumulated. In order to retain the home, the heir must pay the loan balance, which may exceed the value of the home.

I won’t qualify because I am in poor health. There are no health requirements on a reverse mortgage. The only requirement is that the homeowner is age 62 or older. I can’t afford to make monthly payments on a reverse mortgage. There are no principal or interest payments on a reverse mortgage—the lender pays you either a lump-sum payment or a monthly payment. The borrower is still responsible for tax and insurance payments. I won’t qualify because I have a mortgage on my home. You can still qualify for a reverse mortgage if you have current debt on your home. Any debts are paid off with the proceeds of the reverse mortgage.

Only someone who is ‘cash poor’ needs a reverse mortgage. Even if you do not have a pressing need for cash or additional monthly income, a reverse mortgage can be a terrific estate-planning tool. You can use the proceeds for anything else you choose.

A reverse mortgage is expensive. Not necessarily. While a reverse mortgage generally costs more than a conventional loan, is it much less expensive than selling your home, relocating and assuming new monthly expenses. A reverse mortgage is not right for everyone, this is why each potential borrower must complete HUD-approved counseling before applying.

For many homeowners, a reverse mortgage is an excellent way to access the equity that has built up in their home without taking on additional debt or selling the home. The strict guidelines and protections built in to reverse mortgage programs by the federal government and adhered to by FHA-approved lenders make it a safe and secure process.

Additional information on Reverse Mortgages:

 

Contact

Sue Vrbaskovich
Reverse Mortgage Specialist
NMLS# 355380
504-834-1190, ext. 128

Marilyn Cox
Reverse Mortgage Specialist
NMLS# 685994
504-834-1190, ext. 357

 

These materials are not from HUD or FHA and were not approved by HUD or a government agency. Bank of New Orleans NMLS# 329248.

 

 

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