Reverse Mortgage - Myths and Misconceptions
What is it about Reverse Mortgages that instills fear in some senior Americans and their heirs? Could it be that a little bit of knowledge actually can be a dangerous thing? It may also be that many seniors must resort to consulting friends and relatives who proclaim they know the facts, but in reality are grossly misinformed. One excellent reason for this is that their information could simply be out of date. With the recent involvement of the Federal Department of Housing and Urban Development, this updated financial tool could be the answer to many seniors’ financial needs---and their heirs! The fact of the matter is that, when properly applied, Reverse Mortgages can be a valuable, safe, and well priced financial tool for many Senior Americans. So, what are some of these myths and misconceptions? Safety - Many seniors react to the suggestion of Reverse Mortgage by saying “that’s where you take my home”. The fact is that the deed to the home MUST REMAIN in the name of the borrower(s) only and they are in fact highly regulated loans. Cost -The next most heard misconception is that Reverse Mortgages are much costlier than other mortgages. The truth is that closing costs average only about one percent more than that if a regular FHA mortgage were obtained on the same property. More importantly, the longer a senior stays in the property, the lower the overall costs become. Additionally, a well trained Reverse Mortgage Specialist will know how to minimize the accrual of interest on these loans---and preserve the value of the estate! Estate ownership - Another misconception is that the home goes to the lender after the loan becomes due. This also is NOT the case---as any equity left after repayment of the loan, goes to the estate or heirs of the borrower. Since the Reverse Mortgage is “non-recourse”, the most the estate will ever be required to pay to the lender is the value of the home at the time of repayment. Additionally, the heirs may choose to keep the home in the family by utilizing other assets or by refinancing the loan itself. Qualification - Also misunderstood are the requirements for obtaining a Reverse Mortgage. Since no re-payments are ever made as long as one surviving borrower remains in the home, there are NO income or credit requirements. Taxes - Our last myth to dispel is that a Reverse Mortgage is taxable, and affects Social Security and Medicare. That is NOT the case. Reverse Mortgage proceeds are not taxable because they are considered a loan. Additionally, any interest accrued on the loan is deductible by the individual(s) who repay the loan, in the year it is repaid. Please do not let out dated myths and misconceptions keep you from looking to how a Reverse Mortgage can provide you with Financial Independence.
______________________________________________________________________________________ Information provided by Cyndi Stephenson, Reverse Mortgage Specialist, at HomeFirst Mortgage Corp. located at 207 South Alfred Street, Alexandria, Virginia 22314. Office 703-549-3400; Cell 703-953-5900; Toll Free 800-232-1219; Facsimile 703-534-4119 Website http://www.homefirstmortgage.com/reverse or Email: cstephenson@homefirstmortgage.com