FACT: Actually, the reverse mortgage program was designed to help you stay in and own your home longer (Keeping up with property taxes, homeowners insurance, and property maintenance is required.) – you or your estate will retain ownership of your home’s title, just like a traditional mortgage. Lenders are not in the business of owning homes – they wish to make loans and earn interest. The homeowner keeps the title to the home in their name (Keeping up with property taxes, homeowners insurance, and property maintenance is required). What the lender does is add a lien onto the title so that the lender can guarantee that it will eventually get paid back the money it lends when the loan is paid off or when a maturity event occurs, such as when the last borrower dies or vacates the home.

FACT: Quite the opposite! One of the key advantages of a reverse mortgage is that monthly payments are not required. As the borrower, you’re of course still responsible for keeping up with your property taxes, homeowners insurance, and property maintenance, as with any mortgage.

FACT: A reverse mortgage is a “non-recourse” loan – which means you or your heirs will never owe the lender more than the home is worth at the time of its sale. Even if the loan balance exceeds the value of the home when the home is sold and the loan is repaid, your heirs won’t have to cover the difference.

Put simply, your heirs inherit the house, just as they would with any other mortgage. When the loan comes due, they can decide what to do to repay the loan balance. Some arrange their own financing, pay off the loan, and keep the house for themselves. Many sell the house and pay off the balance, keeping any extra funds for themselves. And others opt to do nothing with the house and therefore deed it to the lender.

FACT: As long as you have enough equity in your home, and meet all other requirements, you can have a mortgage or other debt on your home’s title and still qualify. In that case, the proceeds from the reverse mortgage must first be used to pay off the existing mortgage or debt. In fact, many clients get a reverse mortgage specifically for this reason – to eliminate their existing mortgage and take advantage of optional monthly mortgage payments. (Keeping up with property taxes, homeowners insurance, and property maintenance is required.)

FACT: You can stay in your home for as long as you want, as long as you meet the terms of the loan. (Keeping up with property taxes, homeowners insurance, and property maintenance is required.) If you decide to sell the home or move out, the loan would then become due. Reverse mortgage lenders do not want to sell your house, however, there are situations where the lender would be required to sell the home such as if you fail to meet the loan obligations, such as not paying property taxes or homeowners insurance. Additionally, if you have no heirs, the lender may sell the property to settle the debt after you pass away.

FACT: It’s very possible that the value of your property may grow over your lifetime. At the same time, interest will accrue on the outstanding loan amount and be added to the balance. If there’s equity left over after the loan is repaid (usually from the sale of the home), it may be available for you to leave to your kids. (Consult amortization tables for details. Property value and ending loan balance are subject to change. There is no guarantee that there will be equity left over for heirs.) In addition, if a reverse mortgage is employed as a strategic part of your financial plan, in working with a financial advisor, you can avoid draining other invested assets. By using the power of your home equity to fund retirement expenses, you can allow other funds to grow over time and remain intact for your heirs.

FACT: Yes, you can! As you would with a traditional mortgage balance, the proceeds from the sale of the home must first go toward paying off your reverse mortgage balance– so it’s important to understand how much you owe and how much you can expect to get from the sale. And there’s no penalty for paying off a reverse mortgage early.

FACT: The terms of a reverse mortgage are set when the loan is originated and will remain the same throughout the life of the loan. This includes factors such as the loan amount and payment terms. Of course, with an adjustable-rate reverse mortgage, rates are expected to change over the life of the loan as part of the agreed upon terms. The terms of the loan by law cannot be changed, as long as the deeds remain in force. Even better? In addition to being a lender, Longbridge Financial is also a loan servicer, so you can expect a consistent relationship with us for the life of your loan.

FACT: In reality, charges and expenses are applicable to every type of mortgage – and reverse mortgage loan origination costs and interest rates are comparable to those of traditional mortgages. There are FHA insurance costs that some traditional mortgages do not require, but they are relatively small. Typically, lender closing costs and fees can be financed into the loan, so there’s little required out of pocket.

FACT: When it comes to reverse mortgage loans, the fact is that they are a powerful financial tool that can be an important part of your overall financial plan. From improving your cash flow by paying off an existing mortgage to delaying social security for maximizing your benefits, (Consult a financial advisor and appropriate government agencies for any effect on taxes or government benefits.) it’s a flexible product that gives you options. In fact, many financial planners encourage their clients to consider a reverse mortgage as a retirement funding tool earlier rather than later – that’s the opposite of a last resort!