Myth #1 The lender or government will take my home.

FALSE! With a reverse mortgage, you or your estate contiue to retain control of your home’s title. As with any loan, including a conventional mortgage, the lender simply puts a lien on the property to ensure the loan is repaid. 

Myth #2: It will just create another monthly payment.

FALSE! A reverse mortgage does not require a monthly mortgage payment as long as you meet the terms of your loan which means you must continue to pay property taxes, home insurance, homeowner’s association dues, and maintain your home. . If you want to make payments to reduce the loan balance, you can—but it’s totally up to you. The loan doesn’t come due until the last borrower permanently leaves the home or you do not meet the terms of the loan as noted above.

Myth #3: My heirs will be responsible for the repaying the loan.

FALSE! A reverse mortgage is a type of loan called “non-recourse.” This means that the lender can only get repaid from the proceeds of the property sale—with any remaining proceeds going to your heirs. You and your heirs aren’t personally liable if the loan amount exceeds the home value when the home is sold and the loan is repaid.

Myth #4: I won’t be ablet to leave the home to my kids.

FALSE! Generally, the proceeds from the sale of the home are used to pay off the reverse mortgage, but your heirs have the option to arrange to repay the loan and buy the home if they wish to keep it in the family.

Myth #5: I’m afraid my spouse will be kicked out of the house if I pass away. 

FALSE! The Department of Housing and Urban Development has put protections in place to keep this from happening. Eligible non-borrowing spouses can remain in the home if the borrowing spouse has to move to a nursing home or passes away, as long as they continue to meet the terms of the loan.