Reverse Mortgage Myths
There is a lot of false information about reverse mortgages floating around. We believe that you should be well-informed and have the ability to act accordingly. Whether you choose to receive a reverse mortgage or not, you should understand the facts about this type of loan.
Myth 1: You Lose The Title To Your Home
When you are eligible for a reverse mortgage and decide to get one, you keep the title to your home, and you can continue living in it for as long as you would like. Your lender does not take ownership of your home. Rather, they pay you — either in a lump sum, monthly installments, or with a line of credit. This cannot be overstated: your home stays yours.
Myth 2: Your Heirs Won’t Inherit Your Home
Because you retain the title to your house, you can still leave it to your children — or whomever else — in your will. Your heirs will have to pay back the loan, if they decide to keep the house. If they choose to sell the property, they will have to pay back the loan, but they will never have to pay back more than the house is worth. If the house appreciates, they will be able to keep any remainder, once the bank has been repaid.
Myth 3: You Could Be Forced From Your Home
One of the best aspects of a reverse mortgage is that you can remain in your house for as long as you choose. The only way you will ever have to move out is if you default on your loan. Typically this only occurs if you cease paying home insurance, property taxes, or if your home stops being your primary residence. If these circumstances do occur, you will still have the option to pay back the loan, rather than leave your home.
Myth 4: You Have To Pay Taxes
Because the money you receive is based on your home equity, it is not considered income and is not taxable. You will still need to pay property taxes, but otherwise, the money you get is entirely yours. Because you do not have to pay taxes on it, the cash will go further than you might initially expect.
Myth 5: You Have Own Your House Outright To Qualify
Many people think that you need to have paid off your mortgage to be eligible for a reverse mortgage. This is not true; as long as you qualify, you can receive one. That said, you will want to have a certain amount of equity in your house for it to make sense financially. One of the first steps of the reverse mortgage process is meeting with a qualified, independent counselor who will walk you through what to expect from this loan and will help you determine if it is the right move for you and your unique financial situation.
Contact Us To Learn More About The Myths Surrounding Reverse Mortgages
It is essential for you to be well-informed about reverse mortgages, and we are happy to clarify any questions or misgivings you may have about these loans. Call Family Home Loan Texas at 1-800-990-LEND (5363) for more information and to get a free, no-commitment consultation.