1. The bank gets the title to the home.

This is perhaps the biggest misunderstanding about reverse mortgages, and it is totally false. You retain title to the home just like you do with a conventional mortgage.

2. Your heirs will end up having to pay back the loan out of their own pockets.

This is also false. Reverse mortgage loans by their very nature are non-recourse loans. You, your heirs, or your estate will not be required to pay back more than the appraised market value of your home when the loan matures. At that point the home can be either refinanced or sold to repay the loan. The repayment amount will never be more than the current value of the home.

3. You have to make monthly payments on your reverse mortgage.

Not true. You won’t have to make any principal or interest payments on your reverse mortgage. If you currently have a mortgage right now, that mortgage will be paid off when your new reverse mortgage closes. You can get a lump sum of cash or begin receiving payments every month from the bank, or a combination of the two. The only expenses you will be responsible for are the property taxes, homeowners insurance, and regular home maintenance.

4. The home must be paid off to qualify for a reverse mortgage.

False. As long as the home has a reasonable amount of equity, you should be able to get a reverse mortgage.

5. You must have excellent credit and a high credit score in order to qualify.

This, too, is false. There are no income, credit worthiness, or health requirements to get a reverse mortgage. Even if you are involved in a bankruptcy or a pending foreclosure, you could still qualify for a reverse mortgage.

6. Only senior citizens needing more income can benefit from a reverse mortgage.

If you are a homeowner who is at least 62 years of age, with a reasonable amount of home equity, you can benefit from a reverse mortgage. You could use it to increase your monthly income, get cash to invest in a second home or rental home, purchase long-term care insurance, help your children, or virtually any way you choose.

7. Money from a reverse mortgage will affect my eligibility for Social Security and Medicare.

Not so. It is not considered income, since it is from the equity in your home. Because of this, it is also not taxable. (Please consult with your tax advisor for more information.)

8. Reverse mortgages are expensive.

It is true that the up-front costs are typically higher than a conventional home loan. However, there are a few things to keep in mind. One, almost all of the fees can be rolled into the loan, so you will never have to pay them back out of your pocket (they will come from the proceeds of the house later). Second, no loan repayment is necessary until either the home is sold or the last homeowner permanently moves out. Also, the costs for a reverse mortgage are typically less than you would pay if you were to sell your home (closing costs) and move (moving costs).

To get more information on reverse mortgages or to contact a reverse mortgage specialist, please visit our site at www.apply4rm.com.

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