For people over the age of 62, a reverse mortgage may be a great option to consider. However, there are several myths about reverse mortgages. Mortgage professional Fred DeLuca tells us about some of the most common myths and the facts about them.
The first one is if reverse mortgages are safe. Yes, they are. Reverse Mortgages are known as HECMs, home equity conversion mortgage. They’re highly, highly regulated by state and federal laws to make them safe, and to protect, you, the home owner. No matter what happens in the economy, how much money you receive or how long you live in the home, you will never be required to make a mortgage payment. In addition, no matter what happens to the lender, or the homes value.. you would have guaranteed access to the equity in the home. You still need to pay the property taxes and homeowners insurance and keep the property in a good condition. But you will not ever have a monthly mortgage payment.
What if the future loan exceeds the value of the house… does the family lose the home? No, that is not true. Not only is that not true, but thanks to federal insurance your line of credit will still be available and if you’re receiving monthly disbursements, they will continue.
When you no longer live in the home, decide to sell the home or when you pass away, your heirs have two options. First they can pay off the reverse mortgage including any accrued interest and retain ownership, which only about 1 to two percent of the surviving family does.. Or secondly you and your family can sell the home, receive the difference between the net proceeds and the loan balance. I’d say about 98 to 99 percent of surviving families actually do that. You and your family will not ever be liable, even if you’re totally underwater. Meaning, if the sales proceeds does not cover the loan.. You or your family will not have to owe one single penny.
What if a person takes out a reverse mortgage, does that mean they do not own the home? That is a huge myth, you do own the home. The home is pledged as collateral.. but definitely you do own the home, the bank does not own the home.
Are there restrictions that apply to the cash or the equity you receive from a reverse mortgage? The answer to that is no, the money is yours and you can use it any way you want. It’s not taxable, does not affect your social security payments that you receive. But we do recommend, that you do talk to a competent financial advisor to determine if there are any other effects on any of the other benefits that you might be receiving.
Oh and there’s one more thing that you can do with a reverse mortgage. You can buy a home with a reverse mortgage. To see the video we have on that, go to this link: https://www.youtube.com/watch?v=3yOxoatn8Ms
GET THE FREE REVERSE MORTGAGE GUIDE HERE: https://carlayoung.com/guide-to-reverse-mortgage-loans/
Contact:
Fred DeLuca, Fairway Independent Mortgage, 480 862-6165, [email protected]
