Busting The Myths Around Reverse Mortgage
When the term reverse mortgage comes up, many people associate it with a regular
home equity loan or assume it is just another normal mortgage with a fancy name. There are actually quite a lot of myths and half-truths surrounding reverse mortgage. This has confused many people and in turn, stopped them from ever thinking of investigating if this is the kind of mortgage that will suit their needs.
This article will provide you with the simple facts behind some of the myths out there about reverse mortgage so that you will have a clearer idea of what it actually is. This is so that you get a better understanding of this mortgage plan and whether it is what you are seeking, especially if you need the extra money for something important like a major surgery that will run up high medical bills.
So, here's taking a look at some of the myths and the facts behind it:
Myth: Taking a reverse mortgage means I may be in danger of losing my home in future
Fact: Generally speaking, you are in no danger of losing your home at all when you take up this mortgage. It is a special type of home loan that allows you to withdraw cash from your home equity but you probably do not need to repay the lender as long as the property is your principal residence or until death. Usually, the lender will not foreclose on your property for non-payment of loan and you may not need to pay up until you sell it or move out.
Myth: It is a scam
Fact: This mortgage program may be one of the ways for the seniors to supplement their social security or to meet medical bills by withdrawing the equity in their homes. So, the program itself may not be a scam. However, there are plenty of reverse mortgage scams out there that prey on unsuspecting seniors, causing them to lose most of their social security. Thus, it is always wise to check with a HUD-approved lender and mortgage counselor when inquiring about this kind of loan.
Myth: This program is just like another regular mortgage
Fact: Unlike other home equity loans, this program is only available for seniors above 62 years old and you possibly need not repay the loan for as long as you live in your home. If you look at a regular mortgage plan, you will need to have sufficient income to qualify for the loan and you are usually required to make monthly mortgage. While under a reverse mortgage plan, you may borrow an amount that depends on your age, the interest rate and the appraised value of your home instead of based on your income and ability to make monthly payments. Also, for reverse mortgage, your loan may not be due until you have passed away or you have moved out of it.
Myth: I need to go through an estate planning service to take up this loan
Fact: Usually, you do not need to pay to learn more about this program. In fact, it is advisable that you seek out a mortgage counselor to get more detailed information on the loan costs, the financial implications of this loan and the options available to you. When selecting a reverse mortgage, it is important that you learn as much as possible about it before making a final decision of applying for one.
Now that you know the truth behind the myths, do read up more about this special program for senior Americans before taking the plunge.
by: Ask Bill
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