Reverse mortgage myths – as reverse home loans have increased in popularity, so have the misconceptions about these unique mortgage loans. Ensure you know the facts!

Perhaps you have been considering a reverse home mortgage but are concerned about some of the negativethings you have been told. Unfortunately, there are lots of misconceptions and just wrong information about this increasingly popular mortgage option.

Sure, it is true that there are some disadvantages to a reverse mortgage and it is important to investigate the reverse home loan alternatives beforefashioning your final conclusion. However, in the correct situation, a reverse mortgage is an awesome option to have.

We believe that by addressing and clearing up some of the common reverse mortgage myths and misconceptions, you will have a better and more accurate understanding of what a reverse home loan really is and make an informed decision, based on the facts!

Reverse Mortgage Myth #1 – The Lender Will Own My Home

Fact: When you have a reverse mortgage, you continue to own your home. Their is absolutely no change in who owns of the home. A reverse mortgage loan is similar to a traditional loan in this regard – the mortgage is secured against your home, but the lender does not take ownership of it. The difference is that, instead of you making payments to the lender, the lender makes payments to you. Whenever you leave the home, the lender receives their money back (with interest) and any left over equity goes to you (or the estate).

Reverse Mortgage Myth #2 – I Could End Up Owing Money

Fact: In a reverse mortgage you can never owe more than the value of your home. These mortgages are known as ‘non-recourse’ loans, which means that your loan sum will notgo past the value of your home. In the extremely rare event that your home value fell substantially, the lender may end up losing money – because they will only receive, as a maximum, your house value. As an aside, that is why they set up reverse home loan eligibility requirements.

Reverse Mortgage Myth #3 – My Heirs Will be Burdened

Fact: Once you, as the homeowner, pass away, your heirs will have the option of refinancing or selling the home without any obligation or penalty. If they decide to keep the home in the family, they can simply refinance the home (take out a traditional mortgage to pay off the reverse home mortgage). On the other hand, they can simply sell the home. With the proceeds of the sale, they can pay off whatever is owing on the reverse home mortgage. Any leftover equity can be divided. The only affect that a reverse home loan will have on your heirs is that it will reduce the amount of equity in your home – thus reduce the amount of inheritance they get.

In Summary…

Like many popular products, reverse mortgage have their share of myths and misconceptions. While these myths about reverse mortgages are not based on the truth, it is vital to remember that reverse mortgage loan are not for everyone. If you are considering a Canadian reverse mortgage we suggest you contact areverse mortgage specialist for further information and advice.