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Top 10 Reverse Mortgage Myths Dispelled

Irvine, CA August 8, 2007 As reverse mortgages have continued to grow in popularity, so have a range of myths and misinformation about these unique loans. Fortunately, theres more and better information available today than just a few years ago. However, as seniors, the adult children of seniors and advisors are exploring reverse mortgages more than ever before, some old myths still linger and new myths have emerged. Lets take a look at some of the most common misconceptions and discuss the facts.
1.

The bank takes the house OR the borrower can lose the house.

With a reverse mortgage, the borrower retains title to the home throughout the life of the reverse mortgage. The borrower cannot, as a result of the reverse mortgage be forced out of his or her home, as long as property charges, such as taxes and insurance, are paid and the home is maintained in reasonable living condition. Once the last borrower permanently moves out of the home, the loan must be repaid. Most properties secured by reverse mortgages still have equity when a maturity event occurs and therefore the borrower or his/her heirs choose to sell the home to repay the loan and preserve this equity for the benefit of the borrower or his/her estate.

2.

The home must be paid off or be debt-free to qualify for a reverse mortgage.

Reverse mortgages convert home equity into cash. As long as there is sufficient equity in the property, the homeowner may be eligible for a reverse mortgage. In fact, many seniors use a reverse mortgage to pay off an existing mortgage in order to eliminate a required monthly mortgage payment.

3.

When a reverse mortgage becomes due, the bank sells the home.

The borrower is in control of the home and retains title, not the bank or lender. So while its common for th