COMMON USES OF REVERSE MORTGAGE FUNDS
Eliminate monthly mortgage payments (property tax and homeowners insurance payments are still required)
Make retirement savings last longer
Use the line of credit option as a safety net for unplanned emergencies, home repairs, and healthcare expenses, or to preserve investment accounts during market downturns
Supplement your retirement income with monthly payments
Purchase a more suitable home
Support aging in place expenses, like caregiving and home modifications
MYTHS & REALITIES OF
As with many financial products, reverse mortgage loans can seem complicated and there are a number of misconceptions about how the product works. Here are some brief explanations to provide some clarity on the subject:
The lender owns the home.
Myth 1 Like all mortgage loans, a reverse mortgage is secured by a lien and you will not lose your home as long as you meet the loan obligations. The loan obligations include: living in the home, maintaining the home according to the Federal Housing Administration requirements, paying the property taxes and paying the homeowners insurance.
The borrower is restricted on how to use the loan proceeds.
Myth 2 The proceeds from a reverse mortgage can be used for almost any purpose. Many borrowers use them to supplement their retirement income, delay receiving social security benefits, pay off high interest credit cards, pay for medical expenses, remodel their home, or help their adult children.
Once loan proceeds are received, you pay taxes on them.
Myth 3 Like all mortgage loans, a reverse mortgage is secured by a lien and you will not lose your home as long as you meet the loan obligations. The loan obligations include: living in the home, maintaining the home according to the Federal Housing Administration requirements, paying the property taxes and paying the homeowners insurance.
The home must be free and clear of any existing mortgages.
Myth 4 Actually, many borrowers use the reverse mortgage loan to pay off an existing mortgage and eliminate monthly mortgage payments. Paying off the existing mortgage and any other liens is required as part of the loan. It is the borrower’s responsibility to continue to pay for the property taxes, homeowners insurance and home maintenance.
Only people with financial hardships need reverse loans.
Myth 5 The perception that reverse mortgage loans are only for financially distressed borrowers is changing. Affluent senior borrowers with multi-million dollar homes and healthy retirement assets are using reverse mortgages as part of their financial and estate planning, and are working closely in conjunction with financial professionals and estate attorneys to enhance their overall quality and enjoyment of life.
Please contact us at 310-557-1212 for more information