Reverse Mortgage Myths

By
Mortgage and Lending with NMLS# 729950 NMLS # 729950

MYTHS-

1) I would be selling my home to the bank:

FALSE: You keep your home, the lender will add a lien ( just like any mortgage) but you still have complete control over your property

2) My heirs won't inherit anythig:

FALSE: Your estate only owes the balance on the mortgage. The balance is however much you spent and interest. Remember, also, that your heirs will also have any investments you have made with the reverse mortgage proceeds.

3) I might "outlive" the loan:

FALSE: FHA/HUD reverse mortgages are designed specifically so that you cannot outlive the loan. When you get a reverse morgage, the lender will charge you 2% to purchase mandatory FHA mortgage insurance. That insurance guarantees that even if you live to be over 100 years old you can never owe more that the value of your home and you can never be forced to leave.

4) I can be forced out of my home:

FALSE: you cannot be forced out of  your house FHA specifically states that this can never happen.

5) Social Security and Medicare will be affected:

FALSE: money from reverse mortgages is not considered income  because it is a loan. For this reason, a reverse mortgage does not affect Social Security and Medicare benefits.

6) I would have to pay taxes on a reverse mortgage:

FALSE: you're already pay taxes on the money when you're reporting the equity into your home. When you take it out again, it is not taxable. Remember, this is a loan.

7) There are big out-of-pocket expenses:

FALSE: all the costs, whenever closing or interest are financed.  That means there are never out of pocket expenses at any point in the reverse mortgage.

8) A reverse mortgage is similar to a home equity loan:

FALSE: home equity lines may have several requirements such as high income, low debts and good credit that a reverse mortgage does not. Also, you can outlive the home equity loan and end up being foreclosed  on by the bank. This can never happen with a reverse mortgage.

If you are 62 years of age or older, own a home ,you are already qualified for a reverse mortgage. No income or credit scores are required.

Joe D'Agostino, is a Licensed Mortgage Banker with the State Of New Jersey with over 38 years of helping people like you, Nation-Wide.

Feel free to call or e-mail me.

 

 

 

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Rainmaker
1,297,686
Lorrie Semler, REALTORĀ® in the Dallas area. Call/text 972-416-3417
United Real Estate - Addison, TX
Real Service. Real Results. Real Estate

I had a really bad experience with a client, a non-family member executor who "inherited" the results of the reverse mortgage.  The bank stalled, delayed, and dragged their feet about letting go and the interest keep piling up.  It was an awful situation.

Jun 16, 2008 04:51 AM #1
Ambassador
520,144
Stanton Homes
Stanton Homes - New Home Builder - Raleigh, NC
Design/Build Custom Home Builder in North Carolina

Are there any reasons one would hesitate before requesting a reverse mortgage?  I assume in this case no heirs would inherit the home - it would merely be deeded over to the mortgage company instead at the end of the homeowner's life.

Jun 16, 2008 05:59 AM #2
Rainmaker
224,219
Nancy Larson
I am a licensed referral agent in NJ - Hutchinson Island, FL

Thank your clearing up a lot of false information out there. Consumers always felt you were taking everything from them, and actually, a lot of us in the Mortgage field never truly understood it.

Thanks for the valuable information.

Jun 23, 2008 07:15 AM #3
Rainer
116,822
Bo Hussung
Bell Title /Triserv LLC - Nashvle, TN

Joe, Great post. I am a strong supporter of the reverse mortgage. It very well may be one of the only products out there that virtually can not be screwed up. The HUD regulations are so tight, that fees are restricted, LTV is restricted Loan amounts, etc. and the coolest thing is HUD is truly looking out for the consumer with the regulation and it is the only transaction where evryone wins.

Way to post!

Jun 23, 2008 10:44 AM #4
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755,156
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495

Joe,

I lived in Barnegat Light more than a decade ago; we're true desert rats now!  Welcome to Active Rain!

Mike in Tucson

Jul 02, 2008 04:46 AM #5
Rainer
50,003
- -
- - Bogota, TN

Thanks for you for taking the time to comment on this subject in the Active Rain network.  AR is the new "cyber backbone" of the industry, and with it's uplink to Localism.com it is transforming the real estate marketplace. Agents who don't see which way the cyberwind is blowing are going to find themselves at a considerable disadvantage inside of three to five years.

Jul 14, 2008 11:21 AM #6
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772,949
The Somers Team
The Somers Team at KW Philadelphia - Philadelphia, PA
Delivering Real Estate Happiness

Thanks for the info about the reverse mortgages - there are a lot of misconceptions out there about it.  It seems like the media portrays them as "evil".  I think they are a great resource for the right candidates.

Jul 14, 2008 12:03 PM #7
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Joe D'Agostino

Mortgage Officer 46 years!
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