6 Myths of Reverse Mortgages
Sep 7, 2021, 10:10 AM | Updated: 10:12 am
SPONSORED — Retirement should be simple and easy as you embark on the next chapter in your life. After many valiant years in the workforce, money should be your last concern during retirement. Retirees who are 62 or older with equity still remaining on their home are able to apply for a reverse mortgage loan. Many are falsely led to believe that opting into a reverse mortgage means you are indebted to an expensive binding contract when that could not be further from the truth. Below are the widely regarded myths on reverse mortgages debunked.
Myth: The bank will take up the responsibility of the home if you get a reverse mortgage
When signing on to a reverse mortgage, the homeowner still holds the title and ownership of the home. The bank is simply granting the loan in order for the borrower to secure the property as their own. As a homeowner, they are also responsible for all home maintenance needs, retaining homeowners insurances and making property tax payments.
Myth: Retirees can be kicked out of their homes
Federal Housing Association Reverse Mortgages are set in effect and paid back once the homeowner no longer resides on the property. A key clause within FHA reverse mortgages notes that borrowers cannot be forced out of their homes. By maintaining the upkeep of your home, establishing reliable home insurance and paying the annual property tax billed; there should be no detrimental issues with your reverse mortgage.
Myth: Reverse mortgages prey on the naïve retirement community
Retirees can actually benefit from reverse mortgages. With the current advance of modern day medicine, people are able to live longer and fuller lives. However, the potential of outliving the entirety of their retirement savings is a major concern for many retirees. By leveraging home equity with an experienced loan officer at Fairway Independent Mortgage Corporation, one can ease the stress of financial instability. As a highly regulated industry, lenders are required to follow strict state and federal guidelines and adhere to the industry’s code of ethics, giving the investee a sense of financial security.
Myth: Heirs will not inherit homes from their predecessors
Loan officers have no say in the beneficiary of the home. After lenders pass on, their heirs are given a choice. Either they acquire the home by paying the remaining balance on the reverse mortgage or to sell the home and apply the proceeds to pay off the loan. If they choose to sell the home and are left with a sum of money after making the final loan payment, they are able to pocket that remainder.
Myth: Does a reverse mortgage affect social security, Medicare, or pension benefits?
There is no explicit answer to this question. Funding from reverse mortgages are recognized as loan proceeds and not a main source of income. These loans may delay you from dipping into your Social Security benefits immediately by increasing your overall monthly lifetime benefits. Scheduling time to meet with a professional mortgage advisor at Fairway Independent Mortgage Corporation will help provide insight on what you can potentially benefit from a reverse mortgage.
Myth: Retirees are only allowed to spend their loan proceeds on restricted expenses
After the bank receives the final payment on the loan, the remaining proceeds can be applied to any expense. Reverse mortgage proceeds initially come from the money that the retiree already has. Since the equity funds are taken from their home, they can choose to apply this wealth to whatever expense; medical bills, home improvements, retirement account payouts, and so much more. Taking this sum of money and budgeting it efficiently will ensure your financial stability throughout retirement. Fairway’s own skilled loan officers can help aid in this headache by creating a customized financial plan that fits best within your lifestyle.
Why stress over the unexpected when you can avoid it? By meeting with a reverse mortgage planner you can set up a financially strong future for you and your family. Give Fairway Independent Mortgage Corporation a call today!