Is Reverse Mortgage Right For You? 8 Myths and Misconceptions

Is Reverse Mortgage Right For You?

If you’re 62 or older, there’s never been a better time to let the equity in your home, work for you. You’ve worked hard to build and maintain a safe, secure financial future through home ownership. Now it’s time to relax and enjoy some of the things you’ve looked forward to, but could never afford.

A Reverse Mortgage makes everything possible.

What is a Reverse Mortgage?

A reverse mortgage lets you use the equity from your home as loan collateral for anything you want or need. This may include day-to-day living expenses, vacation, cars, medical expenses, or home remodeling. Usage is not limited, (unless you opt for a single-purpose reverse mortgage), and monies may be dispersed to you in one of several different ways, including lump sum, monthly payments, or a line of credit which allows you to draw any amount until the LOC is exhausted. Once you vacate the property, (either through the natural course of death or a move to another residence) the money gets repaid to the lender with interest.

Benefits of a HECM, (Home Equity Conversion Mortgage) or Reverse Mortgage include the following:

  • Money can be used for multiple purposes
  • Competitive interest rates apply
  • Loan term exists for the remainder of the time residing in the home
  • FHA-backed reverse mortgages available
  • Proceeds are tax-free
  • Loan payoff will not exceed home value
  • No penalty for early payoff
  • No payments necessary while residing in the home
  • Multiple means of disbursement of funds
  • Full ownership of the property is retained by the borrower
  • Many owner-occupied residential properties are eligible including foundation built one-family homes, modular homes newer than 1976, residential properties containing 2-4 units, condominiums, and townhouses

Myths and Misconceptions

Contrary to popular belief, a reverse mortgage allows you the financial freedom to live life on your terms while remaining in your home as long as you wish. Unfortunately, much has been said about reverse mortgage loan programs that is simply inaccurate.

Common misperceptions include:

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