It’s important to know the myths associated with this loan. With the information below, you’ll be able to tell fact from fiction when making a decision.
Myth #1: This mortgage works for everyone
Fact: This financial tool isn’t suitable for just about anyone. Conditions apply and must be met. So before you decide to go for this, make sure you have a solid idea of what you’re getting yourself and your family into.
Myth #2: Your heirs will repay the loan
Fact: When you pass away, your heirs will not be responsible for repaying the loan. It’s essentially a non-recourse loan, says the Senior Citizen’s Guide. When you pass away, the property gets sold off, and the money from the sale is used to pay off the loan.
Myth #3: You’ll have monthly payments
Fact: You don’t ever have to make a payment unless you leave the home permanently. A reverse mortgage for seniors is designed to send the payments to you instead.
Myth #4: There are too many conditions
Fact: The only condition that applies is that you have to be financially capable to still pay off your homeowner’s insurance and property taxes. Your house must also be maintained and kept in tiptop shape.
Myth #5: It affects your social security benefits or Medicare
It doesn’t. But it might affect your Supplemental Security Income or SSI, along with your Medicaid.
Myth #6: The bank can make you leave your home
Fact: The federal government regulates this financial product. That means banks aren’t allowed to drive you out of your home. The lender wants you to stay there for as long as the arrangement is practical, possible and safe.
Myth #7: The money from the loan is taxable
Fact: It’s not.
Again, a reverse mortgage isn’t going to fit the bill for everyone. To better understand your options, consult a financial advisor or loan specialist.