TRUTHS & MYTHS BEHIND A REVERSE MORTGAGE

By Laura Biché

Areverse mortgage offers seniors tangible benefits that are not myths. First, this well-structured loan relieves them of worry over keeping up mortgage payments on a reduced income. Second, it may give them the option to increase their cash flow and decide how they want or need to use those extra funds.

Certain requirements must be met, however, to qualify for a reverse mortgage:

• Homeowners must be at least 55 years old

• Property must be owner occupied

• Owners continue to pay property taxes, homeowners insurance, and other monthly obligations

• The home must be maintained in reasonable condition

The Bank Can Take Away My Home

Because a monthly payment is not required, a reverse mortgage remains in effect as long as the borrower abides by the requirements of the loan.

The Home Must Be Debt Free

One of the most important features of a reverse mortgage is that it pays off any prior existing mortgage. In other words, it replaces any traditional mortgage on the property.

As a homeowning and borrower, you never owe more than the value of the property, even if the loan balance is larger than the value. If the selling price of the property doesn’t cover the full sale value of the property, neither borrower nor the estate is liable for the remainder of the loan.