Myth 1: You Lose Ownership of Your Home Reality: This is perhaps the most persistent myth. With a reverse mortgage, you retain full ownership of your home. The lender does not take possession of your property. You continue to live in your home, maintain it, and remain responsible for property taxes and insurance.
Myth 2: Your Heirs Will Inherit Your Debt Reality: Reverse mortgages are designed to be non-recourse loans. This means that you (or your heirs) will never owe more than the home is worth at the time of repayment. If the loan balance exceeds the home's value, the Federal Housing Administration (FHA) insurance covers the difference.
Myth 3: Reverse Mortgages Are Only for Desperate Financial Situations Reality: While reverse mortgages can provide financial relief in challenging times, they are not exclusively for those in dire straits. Many seniors use them as part of a strategic retirement plan to supplement income, manage unexpected expenses, or enhance their quality of life.
Myth 4: You Can't Get a Reverse Mortgage If You Have an Existing Mortgage Reality: You can still qualify for a reverse mortgage if you have an existing mortgage on your home. However, the existing mortgage must be paid off with the proceeds from the reverse mortgage, leaving you with more available funds for your retirement needs.
Myth 5: You Can't Use Reverse Mortgage Funds for Anything You Want Reality: Once you receive funds from a reverse mortgage, you can use them for any purpose you choose—whether it's to cover daily expenses, pay for healthcare, invest in home improvements, or take a dream vacation. There are no restrictions on how you use the money.