Washington Post Debunks Reverse Mortgage Myths

It is time to take another look at reverse mortgages as a retirement resource, a Washington Post article published this week writes. Once holding a negative reputation for high upfront fees, and the “many misconceptions about how they work,” a reverse mortgage could provide an ideal way to tap into home equity for some baby boomers, the Post says.

“…you need to investigate the ramifications of the program on your finances,” the article warns. “Your ability to qualify for certain need-based programs such as Supplemental Security Income or Medicaid could be hurt by the additional funds received from a reverse mortgage. Also, this is not a good idea for people who are seriously ill or who plan to move in a year or two, because the cost of the loan would be high.

As long as you don’t fit into those categories, the benefits are numerous.”

The article details the mortgage insurance that the Federal Housing Administration uses to guarantee the loans as well as the negative amortization process and difference between fixed rate and adjustable-rate options. It also goes on to debunk common myths:

“Common misconceptions about reverse mortgages are numerous. Reverse lenders cannot kick you or your surviving spouse out of your home so long as you continue to pay your property taxes and insurance. The reverse mortgage continues until the last surviving borrower sells, moves or dies. Another myth is that your heirs will be stuck paying off your reverse mortgage. Not true. Neither you nor your heirs will ever have to pay off a reverse mortgage out of pocket. If, at the time the reverse mortgage becomes due, your home still has equity, your heirs can sell your home, pay off the reverse mortgage and keep the excess. If your home does not have any equity at that time, your heirs can just walk away with no personal liability.”

Read the full Washington Post article.

Written by Elizabeth Ecker

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please