There are many myths related to Reverse Mortgages. Sometimes these myths prevent a potential borrower from getting a Reverse Mortgage, even though a Reverse Mortgage could really help their financial situation. Here are a few of those myths.

Myth #1: Ownership of the property is transferred to the lender

Reality:  The owner keeps ownership and title of the property. A Reverse Mortgage is still a mortgage. It is not a transfer of title and never will be.

Myth #2: Loan Costs and fees are high and unregulated.

Reality: On a traditional reverse mortgage, the lender fees are based on the loan amount. On a Reverse Mortgage the fees are based on the appraised value of the home. Also, on a traditional mortgage, there are many additional lender fees beside the Origination Fee. HUD, or FHA, does not allow this and these fees are regulated. This is a government regulated loan program. Plus, closing costs are included in the new loan, eliminating out of pocket expenses.

Myth #3: A Reverse Mortgage will disqualify an individual from other Federal Benefits.

Reality: A reverse mortgage has no impact on Social Security or Medicare benefits. A Financial Planner should be consulted to make sure there is no adverse impact to Medicaid and Supplementary Security Income Benefits.

Myth #4: When the homeowner dies, the survivors lose their inheritance.

Reality: This is definitely not the case. But this is the Myth that really concerns people. If the spouse is on title, they can continue to live in the home and receive the reverse mortgage benefits. If there is not a surviving spouse, the remaining equity in the home is passed to the heirs. The heirs can sell the home or keep the home by applying for a traditional forward mortgage.They will never owe more than the home is worth since a Reverse Mortgage is a Non-Recourse loan. The lender will typically give the heirs 6 months to sell or refinance.

Frost Mortgage is a Direct Endorsed FHA Reverse Mortgage Lender located in Orange County, CA. We can help you to determine if a Reverse Mortgage is right for you. For more information on a Reverse Mortgage, please contact Tim Storm at 877-786-4243 x 7.