When looking into reverse mortgage options, it can be hard to decipher between fact and myth. It is important to understand the aspects of the program to make sure that it is right for you and your situation.
Simply, a reverse mortgage is a type of loan that provides you with a monthly income, a lump sum of cash, or a line of credit. Or any combination you wish. It also pays off your existing loan, if you have one. So you have no house payment. The monthly income you receive from the reverse mortgage is guaranteed and you will receive it as long as you remain living in the home. You can never owe more than your home is worth, no matter how long you live.
Below are the major facts and myths that you often hear.
MYTH: You do not own your home.
FACT: You continue to own your home and remain on title, just as you are now. You can even refinance your home, sell it, or pay it off with no penalties.
MYTH: It can be hard to qualify.
FACT: On the contrary, you just have to be 62 years of age and own your home. There isn’t even any income qualifying and very minimal credit requirements.
MYTH: The closing costs are higher than normal loans.
FACT: Closing costs are similar to other types of home loans. You will receive a Good Faith Estimate of costs before you close. You even have the option of financing with your reverse mortgage loan. The only other cost involved may be for an appraisal in advance of closing. In most cases it is the only fee you pay in advance of closing.
MYTH: This will negatively hurt my taxes and social security.
FACT: The proceeds from a reverse mortgage are not considered income and therefore are not subject to income tax and have no affect on Social Security benefits. We recommend that you consult with your tax advisor.
MYTH: Payment can be a problem.
FACT: You only need to pay the loan when the home is sold or when you permanently leave the home. If you and your spouse enter the loan together and in the event of death of one of the spouses, the surviving spouse remains in the home. They continue to receive the same amount of income as before. Also, for your heirs, they have the option of paying the loan off with other assets or even refinancing and all remaining equity belongs to your heirs.
When interested in a reverse mortgage loan, look at all the facts. This service is helpful for many, but there are other mortgage loan solutions for others. It all depends on what you are looking for and your current situation.
Ruben Soliman has experience in the real estate industry. If you have any questions regarding California reverse mortgages visit www.ameritekmortgage.com for services and further information.