Here are just a few of the benefits of purchasing with a reverse mortgage.
Benefits of the Reverse Mortgage.
- No monthly mortgage payments for as long as you live in the home.
- Less financial worry in your retirement years
- Protect retirement savings and preserve your portfolio
- No income and no credit score qualification
Myths and Facts of the Reverse Mortgage
Myth #1: The government gets my home when I die.
The reverse mortgage is really no different than a regular mortgage with a different way to pay it back. When the last senior holds title to the house leaves the home permanently, either thru vacancy or death, the heirs or appointees have 12 months to pay off the reverse mortgage balance. They can sell the home or get their own loan for it. They don’t have to make any payments. They have 12 months to work it out.
Myth #2: Once I do a Reverse Mortgage, I’m locked in and can’t sell my house.
You can sell anytime without penalty.
Myth #3: I am leaving my kids with a financial mess.
Most adult children want their parents to enjoy life and age comfortably. But ask your kids to chip in a few bucks if your HVAC system fails or you want to take a vacation and see what they say. The Reverse Mortgage allows borrowers to care for themselves financially and get something back for all of the years of hard work. Once again, your heirs have 12 months to either sell the home or get financing for it. If you owe more than the house is worth, which is highly unlikely in this situation, there is no personal recourse and your heirs can simply hand over the keys if they don’t want it. You can even make interest-only payments so you don’t owe more than the home is worth but that likely defeats the purpose of the reverse mortgage.
Myth #4: Closing costs are high.
There are closing costs on all real estate transactions. The costs on a Reverse Mortgage are not much different and HUD sets a strict limitation on fees charged by Lenders.
The Downsides to a Reverse Mortgage
1) Even though you will not have a mortgage payment, you still have to pay your property taxes, homeowner’s insurance and HOA dues.
2) The property has to be your primary residence. Can’t be used on rental properties.
3) You have to do a short HUD/FHA counseling by telephone.