In almost any field there are myths that seem to take on a life of their own until we’ve heard them so many times, they must be true. Certainly the Reverse Mortgage field has not been immune to these myths – I hear at least one of these every day. Today we’ll attempt to debunk some of the most often repeated Reverse Mortgage myths.
1. The lender will take my home. No, lenders are in the business of lending – not taking or owning homes. The title to your home remains in your name until you decide to sell it.
2. I’ll never be approved because my credit is so bad. No, your credit – good or bad – does not enter into the decision of your lender to approve your Reverse Mortgage. Since you will not be making monthly payments on your loan, a good credit report is simply not necessary.
3. I still have a mortgage on my home, so I can’t get a Reverse Mortgage. No, you can still qualify for a Reverse Mortgage if you presently have a mortgage on your home; however, the funds from the Reverse Mortgage will have to satisfy your existing mortgage at the closing.
4. A Reverse Mortgage will affect my Social Security benefits. No, funds that you receive from a Reverse Mortgage are not considered income; thus, are not subject to Social Security income limits. If you are receiving Medicaid, you will need to structure your Reverse Mortgage in such a way so as to conform to Medicaid guidelines.
5. I’ll owe income taxes on the money I receive from the Reverse Mortgage. No, remember the money received from a Reverse Mortgage is not considered income; thus, no income taxes are owed to the IRS or state tax agencies.
The Reverse Mortgage Gazette 