Dispelling Common Reverse Mortgage Myths
A reverse mortgage is a unique borrowing option available to certain seniors who would benefit from a monthly supplemental stipend in their later years. Reverse mortgages were designed by the government to allow seniors with substantial home equity in their homes to receive loans in exchange for such equity. There is a substantial amount of misinformation in the market surrounding reverse mortgages, their terms, their approval qualifications and more. At Corban Financial Group, we dispel reverse mortgage myths and explain in plain detail to clients what reverse mortgage truly is, and what it means for them. If you are looking for a home in Redondo Beach, Torrance, Hermosa Beach, or surrounding California, contact Corban Financial Group today. We offer complimentary consultations and are here to answer any questions you may have as you begin to explore reverse mortgage as an option.
Myth 1: Signing a Reverse Mortgage Gives Ownership of Your Home to the Lender
This is one of the most common misconceptions surrounding reverse mortgage. While it is true that a reverse mortgage provides a line of credit, cash payout or regular payments in exchange for home equity, it does not transfer ownership of your home. When you enter into a reverse mortgage, you continue to own your home and are responsible for all associated costs of homeownership. However, you will not have to pay monthly mortgage payments. You will continue to own your home until you die or until you choose to sell your home. At that time, you (or your loved ones) can choose to pay off the remainder of your loan or your home will be sold to pay for what remains. As long as you continue to make payments on your reverse mortgage and live in your home as a primary residence, your home is yours for the life of your loan.
Myth 2: Your Heirs May Be Held Responsible for Your Loan After Your Death
One very clear stipulation of reverse mortgage is that your heirs will not be held responsible in any way for your loan after your death. As stated, they will be given the opportunity to pay off the remainder of your loan in exchange for keeping ownership of your house. If they do not choose to do so, then are free to walk away and your home will be used to settle the loan. Even if your home’s sale price is less than the remainder owed on your loan, your dependents will not be responsible for the disparity.
Myth 3: Reverse Mortgage is Only for Seniors with Certain Funding Needs
Reverse mortgage loans can be paid out in one of three ways. They are great for clients age 62 and older who are in a number of unique situations. Some clients choose a lump sum payout in exchange for their home equity. Other clients are better suited for a monthly stipend option, which can provide steady supplemental income. Still others choose a line of credit for their reverse mortgage loan, to use at their leisure. The type of reverse mortgage you choose depends upon your unique lifestyle and goals. Some of our clients even choose a combination of the three payout options.
Myth 4: Reverse Mortgage is Funded by the Government
Reverse mortgages are not funded through the US government. They may, however, be insured through a division of the US government, the US Department of Housing and Urban Development. These government-insured reverse mortgages are called Home Equity Conversion Mortgage (HECM), and they are funded through government-approved private lenders like the Corban Financial Group.
Getting Started Today
The Corban Financial Group team will explain each of your three options with their pros and cons so you can make an informed decision about your reverse mortgage. Contact us in Redondo Beach, Torrance, Hermosa Beach, Rancho Palos Verdes, Palos Verdes Peninsula, San Pedro, or any other surrounding communities to schedule a consultation. We can help dispel reverse mortgage myths and give you honest answers today.
