September 8, 2016
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.
- 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.
- 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.
- 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.
- 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.
- 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.
Source: Rich Donohue, CSA, Senior Security Advisors