Reverse Mortgage Myths & Realities

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
This post is to help explain the program as many financial products, reverse mortgage loans can be complicated and there may be a number of misconceptions about how the product works.

Do you know the Myths vs. the Realities?

Myth #1 – The Lender Owns the Home
The Reality – You will retain the title and ownership during the life of the loan and you can sell your home at any time. The loan will not become due as long as you continue to meet loan obligations such as living in the home, maintaining the home according to the Federal Housing Administration requirements and paying property taxes and homeowners insurance.

Myth #2 – The Home Must be Free and Clear of Any Existing Mortgages
The Reality – Actually, many borrowers use the reverse mortgage loan to pay off an existing mortgage and eliminate monthly mortgage payments.

Myth #3 – One Loan Proceeds are Received, You Pay Taxes on Them
The Reality – Reverse mortgage loan proceeds are tax-free as it is not considered income. However, it is recommended that you consult your financial advisor and appropriate government agencies for any effect on taxes or government benefits.

Myth #4 – The Borrower is restricted on How to Use the Loan Proceeds
The Reality – The cash proceeds from the reverse mortgage loan can be used for any reason. Many borrowers use it to supplement their retirement income, delay receiving social security benefits, pay off debt, pay off medical expenses, remodel their home or help their adult children. You have worked hard for this asset and prudence along with budgeting should be the proper approach to enjoying proceeds received from your reverse mortgage.

Myth #5 – It’s Only for Poor People
The Reality – The perception of the reverse mortgage as an assist for the “poor” borrower is changing. Many affluent senior borrowers with multi-million dollar homes and healthy retirement assets are using reverse mortgage loans as a part of their financial and real estate planning and are working closely in conjunction with financial professionals and real estate attorneys to enhance the overall quality and enjoyment of life.

As a direct lender licensed in multiple states, we offer the reverse mortgage and if you have any questions or would like to determine what you’re qualified for we are always eager to help our LoanSafe community answer any questions they may have no matter what program they have an interest in.
 
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RoseiB

LoanSafe Member
Great post!!!!!:)

My parents want to buy a new home in Texas. They are searching for some good mortgage option.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Great post!!!!!:)

My parents want to buy a new home in Texas. They are searching for some good mortgage option.
I'm here whenever you're ready! Our company is licensed in Texas and I can put together a few different options depending on their goals & needs.
 
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