Reverse Mortgage Myths

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.

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Outlook for the Future

     Happy New Year!  It’s just after 8:00 am on January 1st, and I have already heard – three times – the statistic that approximately 7,000 Baby Boomers will turn 65 each day over the next 20 odd years.  After surviving a brutal economic recession, many of the Boomers remain optimistic according to a survey conducted by AARP.

     So, Happy Birthday to the first 7,000!  But what does this mean for the rest of us Seniors?  On the plus side of the ledger, since many plan to continue working, we can expect that a high degree of experience will remain in the nation’s workplace.  Perhaps their extended years on the job will help pass their knowledge to the younger workers and benefit us all.

     On the down side, most services aimed at Seniors will be under pressure to survive and thrive under the tidal wave of new participants.   Medicare and Social Security, which are already in financial difficulty, will be severely strained and likely will need to undergo changes.  This will probably mean that we will each be more responsible for our Golden Years than we may have planned to be and that government programs will be cut back, or unavailable to us until we attain a higher age than previous Seniors.

      Certainly, it is time for each of us to honestly assess where we are financially today and where we need to be in order to live the lifestyle we want and deserve.

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