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Reverse Mortgage Myths

By K C

Education & Training with Independent Leadership & Financial Fitness Consultant

September 19, 2007 05:31 AM

Here are some interesting myths that I can admit that I've had before understanding the product.

Heirs will be against home-owner getting a reverse mortgage. This one I've seen myself with my own family. I know my parents would have found it much easier to care for their elderly parents with this type of mortgage product. Yes their are times where heirs may be concerned about inheritance, however, in most cases the extreme cost's of health care and care giving will eat up any inheritance's, therefore primary care if often what heirs want for their love ones.
Home-owner could own more then the value of their home.
Lender takes the title of the borrower's home. The reality is that the homeowner retains full ownership of property. A reverse mortgage is simply a lien against the property. So the homeowner will maintain the title of the home and unlike some myths the bank does not have the right to kick them out of their home for any reason.

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Simon Conway

Orlando Area Real Estate Services - Orlando, FL

How about the high fees that you hve to spend on a reverse mortgage?

Sep 19, 2007 05:47 AM

Chris Bates

www.ePropertySites.com - Aliso Viejo, CA

A Reverse Mortgage can be a wonderful benefit to the borrower. The main thing I have always articulated is that borrowers with Master Bedrooms upstairs should think about getting a home that is one level or main floor master. Thinking about how the borrower can stay in the property forever makes the Reverse Mortgage a viable and welcomed product. If they will need to sell in the near future, they may be better off to Sell now and take the equity direct to pay for care and living expenses.

Sep 19, 2007 06:10 AM

Anonymous

Karl K Christen

Simon, good point. The maximum you can charge on a reverse mortgage is 2.00 points. And those are negotiable, thought most lenders stick with those fee's. So the fee's are not usually any worse then a normal refinance. The major difference is that most brokers I know soften the fee's by including a 1.00 YSP with 1 up front, where in a reverse mortgage it's two up front.

Sep 19, 2007 07:20 AM

Jay Beckingham

Christensen Financial Mortgage - Port St Lucie, FL

Seniors ROCK!

reverse mortgages can be a nice addition to senior citizens retirement portfolios. it creates a nice income flow for which you do not have to credit or income qualify.

Sep 19, 2007 10:02 AM

Ronald Gillis

Southwest Florida Notaries (Mortgage Notary Signing Agent) - Port Charlotte, FL

CNSA Southwest Florida. Notaries, Port Charlotte, 941-7-NOTARY

Karl, while it is no doubt if you read my blog, I am a BIG proponent of reverse mortgages, I believe in correct facts, so an informed decision can be made. Your very last statement is incorrect though....I did a blog about how many Reverse Mortgages are being foreclosed upon, and pulled up a week of LP's in my county. Of the 61 for the week ZERO were reverse mortgages. BUT, they CAN be foreclosed upon, very EXTREMELY rare, but it can happen. The three most likely reasons - 1) Not paying county property taxes (county & bank might foreclose) 2) not paying homeowners insurance 3) Not paying condo/HOA dues/fees. Again, I repeat, these are VERY RARE, but it can be foreclosed upon. FYI...

Aug 13, 2008 04:56 PM

Reverse Mortgage Myths

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K C

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