When it comes to a reverse mortgage, their reputation often precedes them. Many are skeptical about the idea behind a reverse mortgage based on a variety of different misconceptions. However at the root of this skepticism is confusion on what a reverse mortgage actually is. Reverse mortgage’s let seniors age 62 or older take equity out of their home and turn it into tax deferred mobile assets. Funds from a reverse mortgage can be used for whatever the borrower desires, including paying off existing mortgages. A key difference between a reverse mortgage and a traditional mortgage is that they are not paid back on a monthly basis. This doesn’t make repayment “optional” because banks/lenders are still in the business of making money not giving it away. More so, the outstanding balance of a reverse mortgage is paid back when ones home is sold, vacant for an extended period of time, or when the last living owner passes on. So as for the less than desirable reputations that reverse mortgages can get, below are some common myths that are simply untrue.

Myth 1: If I don’t pay the outstanding balance, my family is stuck with the bill.

Outstanding balances do not become a burden on your family because reverse mortgages are “non-recourse” loans. Non-recourse loans are similar to typical loans (recourse loans) in that your home is collateral for not repaying the outstanding balance. However, they differ in that collateral is the only thing the lender can hold over you. In the event that you default on your mortgage, the bank will foreclose and immediately move to sell the home so they can make up the difference on the outstanding loan. If they don’t make up the difference, the bank is stuck with the bill which is why non-recourse loans are higher risk for lenders (hence higher interest rates for reverse mortgages).

Myth 2: Existing debt disqualifies you from acquiring a reverse mortgage.

Lenders take into consideration the amount of existing debt you have prior to qualifying you for a reverse mortgage. However, your debt will not deny you qualification if the amount you qualify for can cover your existing debt. Minimal or zero debt is optimal, however even your debt is sizable, it just means that you’ll have less funding after the existing debt is paid off. In essence, a reverse mortgage lets you pay off an existing mortgage and lets you do what you want with the excess funds.

Myth 3: The lender gets ownership in my home.

If you get a reverse mortgage, you’re still responsible for paying property taxes and the general upkeep of your home. For this reason, the lender has no right to title on the property. The only way a lender could ever obtain ownership is if you default on the loan. With a reverse mortgage, your name and your name only stay on the property title.

Reverse mortgages are a great financial opportunity if you know the facts and work with a reputable lender. They are exclusive to seniors and can lead you in the right direction towards a financially comfortable retirement.

Key to getting the most out of a reverse mortgage is knowing the Pros & Cons. Get the information you need at www.7reversemortgagedisadvantages.com.

Get the facts you need at http://www.7reversemortgagedisadvantages.com/index.html

Author Bio: Key to getting the most out of a reverse mortgage is knowing the Pros & Cons. Get the information you need at www.7reversemortgagedisadvantages.com.

Category: Real Estate
Keywords: reverse mortgage advantages, reverse mortgage disadvantages, reverse mortgage myths