You have probably heard of reverse mortgage as a way for seniors to get cash and pay off their debts. Reverse mortgage is a type of loan that allows seniors or the borrowers to borrow money from a lender by converting a portion of their home’s equity into cash.

To be eligible for a reverse mortgage, you have to be of retirement age or at least 62 years old. You should also own the home, meaning the property’s title is under your name. If you still have not paid the mortgage in full, just make sure that the balance left is small enough to be paid off by a portion of your reverse mortgage loan.

A senior applying for a reverse mortgage should also live in the home. The lender will then determine whether the applicant is eligible for a reverse mortgage loan or not.

However, a lot of questions and controversies are involved in the reverse mortgage for seniors. Some people think that lenders take advantage of seniors who badly need the money. If you want to find out some myths involving reverse mortgages and whether they are true or not, you can review the paragraphs below.

Myth #1. The lender will own your home if you get a reverse mortgage loan.

False. This is not true because the homeowner or borrower does not need to give the title of the property as collateral. They still have the title and are still considered as the owner of the home during the life of the loan. They just have to make sure that they are living in the house and the property is maintained. They also have to make sure that taxes and insurance fees are paid dutifully.

They only need to pay off the loan when they decide to move out of the house. Some borrowers decide to sell the home and move to a smaller house to pay off the loan and to use the remaining cash for other things.

Myth #2. You have to pay off the mortgage to be eligible for a reverse mortgage.

False. You can get your reverse mortgage loan application approved as long as your home has enough equity which you can convert into cash. It does not matter if the mortgage is still not fully paid. In fact, borrowers who have a small balance left on their mortgages pay off the amount using the money they got from their reverse mortgage loan.

Myth #3. You may end up owing an amount which is greater than the value of your home.

False. Reverse mortgage lenders are strictly guided by a federal bureau which ensures that the borrowers are protected from sharks and lenders who take advantage of their borrowers, especially seniors. The structure of this type of mortgage loan also ensures that the borrowers will not owe money greater than the property’s value.

Myth #4. You are only allowed to use the money for certain things.

False. Some people think that there are restrictions when it comes to how you may use the money you got from the reverse mortgage loan. This is not true because once you have the cash in your hands, you can do anything you want with it. You can use it to pay for medical bills, insurance premiums, utility bills, tuition, mortgage, auto loan, and credit card bills. Other seniors even use the money to travel, assist their children who are in deep financial trouble, buy things for themselves, and just basically lead a comfortable life after retirement.

Final thoughts

These are just some of the myths that are usually associated with reverse mortgage. It is important to learn everything you need to know about this type of loan before applying for one.

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Knowing more about http://www.reversemortgagedirect.net helps a lot in ensuring your future. Learn more at http://www.reversemortgagedirect.net/what-is-a-reverse-mortgage.aspx.

Author Bio: Knowing more about http://www.reversemortgagedirect.net helps a lot in ensuring your future. Learn more at http://www.reversemortgagedirect.net/what-is-a-reverse-mortgage.aspx.

Category: Finances
Keywords: reverse mortgage, mortgage, real estate, personal finance, seniors, loans, retirement, investing,