Reverse Mortgages have been around for over 50 years and have gained quite a reputation in that time.
In the early days of the industry, lenders focused purely on the value of a home. In 2015, the Reverse Mortgage program started adopting a regulation of “financial assessment.” In this process, the lender reviews the borrower’s credit history, property charge history, and monthly residual income.
Why do we check into these things if the loan doesn’t require a monthly principal and interest mortgage payments? Each homeowner is unique, and it’s essential to create a dialogue with the borrower to assess if the Reverse is the right solution for them. Reviewing financial status and history is an important step in this process.
Throughout their history, reverse mortgages have changed the lives of so many people. Still, there are a lot of misconceptions about them. In this article, we will address why common “myths” about Reverse Mortgages are incorrect and provide you with additional resources.
Top 5 Reverse Mortgage Myths
🐍 It’s a huge scam
Reverse Mortgages aren’t right for everyone, but they are by no means a scam. Like any major financial decision, careful consideration should be taken. People should always work with a reputable lender who has been highly ranked by Consumer Affairs and can create a tailored solution for your situation. Finance of America Reverse employees are honest, hard-working people who want to help people retire on their terms.
🏠 People lose their homes
A lot of people believe this about Reverse Mortgages. But here’s the truth: a lender can’t just take your client’s home. Yes, sometimes foreclosures happen with a Reverse Mortgage, but often for very different reasons than people think.
🆘 It’s the last resort
Many people think of Reverse Mortgages as a “last resort,” but that perspective has shifted. They are now being used as a smart retirement strategy. While some of our customers use it as a tool to defer collecting social security or as a safety net for emergencies, others use their home equity to create more financial flexibility in their retirement years. Some use Reverse Mortgages to start a new business, travel the world, help family members with education expenses, make charitable donations, or even use the funds for buying additional real estate.
🏦 The Bank will take the home
This is a common misconception about Reverse Mortgages. With a reverse, the home is still your clients. As long as your clients meet the loan requirements, they will retain ownership and keep the title to the home.
💰 Reduces or eliminates the inheritance for your client’s children
With a reverse mortgage, you can still leave your client’s home to their children. The title will pass to your client’s estate and heirs who can choose to keep the house by refinancing the existing mortgage balance.
Retirement looks a lot different today than it did 50 years ago. Reverse mortgages are a modern and savvy strategy to add to your client’s retirement plan.