Myths About Reverse Mortgage

Myth #1

"The bank will take title to my home."

FALSE: You retain title to the property. As with any other mortgage loan, the lender will place a lien against the property as collateral for the reverse mortgage balance, but the homeowner retains ownership at all times.

Myth #2

"We have bad credit and limited income. We could never qualify for a reverse mortgage."

FALSE: Unlike traditional loans, there are no credit or income requirements. This is because there are no monthly payments to make, so the lender does not have to verify your ability to make them. Instead, the loan will be repaid from your home's equity after you no longer live in it.

Myth #3

"I owe money on my mortgage, so I don't qualify for a reverse mortgage"

FALSE: You do not have to own the home free and clear. As long as the existing loan on the property is 50% or less of the value, you are a good candidate. Plus, the older you are, the less equity is required.

Myth #4

"I can't get a reverse mortgage, because my house needs too many repairs."

FALSE: In fact, you can use the proceeds of the reverse mortgage to make those repairs! And you won't have to make monthly payments.

Myth #5

"When the reverse mortgage becomes due, my kids will be stuck with a big bill"

FALSE: Upon your passing, your heirs can sell the home to pay the balance. They will never owe more than the value of the home when you use the federally-insured HECM reverse mortgage. This is because of the required mortgage insurance with the program. If the value of the home is less than the outstanding balance, the lender is paid the difference from the insurance, never from your heirs.

Myth #6

"Reverse mortgages can only be used for home improvements, not for taking that European trip I've always dreamed of."

FALSE: You can use the proceeds for anything you want, from travel to spoiling the grandkids to paying for medical expenses and home improvements.

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Mortgage Associates, Inc. is an FHA-approved Mortgage Broker (78225-0000-4) and is licensed in Maryland, Virginia (#MB-1038), Pennsylvania and Delaware. Mortgage Associates, Inc. is not affiliated with, or an agent or division of, a governmental agency or a depository institution.

Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, and home value. As a broker, we can arrange a loan with a third-party lender, but we cannot make, fund, or approve mortgage loans or guarantee rates. Not all programs are available in all areas.

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