Jan 23, 2015

What is a Reverse Mortgage? Part 2

Finances

by Jason Eichmiller

In Part 1, we defined what a reverse mortgage truly is. Let’s take it one step further and look at common myths about this program with view to debunking them. There are 3 aspects of reverse mortgages generally misunderstood by both the general public and professionals alike.

The first misconception is “If I do a reverse mortgage, the bank will get my house when I die.” I’m not sure where this myth came from, but we’re going to bust it right away. When you get a reverse mortgage, it is just a lien (or mortgage) on your title; you remain the homeowner. And one of the most important characteristics of a reverse mortgage is that it allows the home to be passed down to the heirs. In fact, even if there is no will, the home will still go down the “family tree” to the kids. Pretty neat, huh?

A second misconception that comes up is, “If I do a reverse mortgage, the bank or government can kick me out of my house.” As long as a senior keeps the home as his or her primary residence, pays property taxes and homeowners insurance, and maintains the home in decent condition they can NEVER lose the home. Now, if a senior decides not to pay his or her property taxes the reverse mortgage can be called “due”, but I’ve never had a client lose their home in a reverse mortgage. Ever. It comes down to you as a homeowner knowing your responsibilities.

Finally, there are those who think, “If I do a reverse mortgage and die, my spouse will lose the home”. Before August of 2014, if a homeowner 62 whose spouse was under 62 got a reverse mortgage, the spouse had to be removed from the deed and could lose the home if the over 62 year old homeowner died. Thankfully, the FHA realized that this was not fair and CHANGED the program. Now, if a homeowner over 62 dies and the under 62 year old spouse still lives in the house, the spouse will NOT lose the home as long as she pays her property taxes and homeowners insurance.

Hopefully, I’ve clarified and debunked the primary misconceptions about reverse mortgages and you are now better prepared to decide if this is a good choice for you.

Jason Eichmiller is a Reverse Mortgage Expert at Open Mortgage(NMLS # 2975) in Ambler, PA. Over the years Jason has helped over 400 seniors learn about and acquire reverse mortgages. He is an industry tested professional, and is well known for advising attorneys, CPA’s and financial planners on how to use reverse mortgages as a tool to help their clients. For more information, please call Jason at (267) 289 1095, email at jasoneichmiller@openmtg.com or visit www.reversemortgagereality.com. Jason’s NMLS # is 297995.