The Most Common Misconceptions about Reverse Mortgages

Home Equity Conversion Mortgage (HECM) is also known as a reverse mortgage. Most people are confused about its idea and are worried about utilizing it. However, for those aged 62 and above who have their own home, you must learn more about HECM. Below are the most common misunderstandings about reverse mortgages:

1. You Won’t Own Your Home

Reverse mortgages do not result in the loss of ownership of the home and enable you to keep the property and pay it off later. You can take out a reverse mortgage without selling or losing your home. However, you will have to pay off the mortgage upon sale of the house or death.

2. You Won’t Be Able to Sell Your Home

With a HECM, you can sell your home at any time. Once you take out a reverse mortgage, you can sell your home as much as you want, as long as you are still alive and there is a mortgage payment. As long as you own your home, you will be allowed to sell it.

3. There Are a Lot of Hidden Fees

Most homeowners usually worry about hidden fees, but this is not the case for reverse mortgages. There are no hidden fees for a HECM, and you will have to pay only one fee, which is the mortgage insurance premium (MIP). It is a one-time fee charged from the closing date.

4. It’s a Replacement for a Traditional Mortgage

It is essential to understand that a HECM is not for everyone. It is not a replacement for a traditional mortgage. It is not a mortgage at all. HECM is a type of home equity conversion product that enables a homeowner aged 62 years old and above to access the equity in their homes.

5. Your Partner Will Have to Move Out When You Pass Away

If your spouse or partner is your house’s co-owner, they become co-borrowers. They don’t need to move out of your home when you die while the reverse mortgage continues. If you are the sole owner of your home, the HECM reverse mortgage can be transferred to your spouse as long as they are living in the house.

6. It Is a Bad Financial Decision

Many people are worried about a reverse mortgage because they think it is a wrong financial decision. However, this is not the case. It is just a loan that you will pay back in the form of a home equity line of credit. You can increase your monthly cash flow by using your home equity.

7. It Will Affect Your Heirs

HECMs are non-recourse loans, which means they cannot be passed on if you pass away. This loan will not affect any of them. However, upon selling of the property, any excess amount gained will be retained by the estate, but at the same time, the amount due will only be capped at the home’s value at the time of repayment. If there is a short, your loved ones will not need to shell out additional finances.


As you can see, most of the worries related to HECMs are unfounded. It is a safe and sound way to access the money in your house without moving out. Also, it is a great way to take care of your medical expenses when you are no longer able to work. If you consider a HECM, do some research and inquire about it with a financial specialist.

Need the best home loan program? Century City Mortgage can help you out on that. Be it a reverse mortgage or a traditional home loan, you will no longer have to worry about not finding one because Century City Mortgage can bring you custom financing solutions. Contact us today to get started.