Reverse mortgages have gained a lot of popularity in recent years, but they’re an often misunderstood financial tool. Our team at Harbor Mortgage Company wants to help dispel some of the rumors and myths about reverse mortgages—have you been misled by any of these?
Myth #1 – The bank owns your home.
This is one of the biggest misconceptions about reverse mortgages, and it’s not true. The reverse mortgage allows you to access a portion of the home’s equity without selling the property—you retain ownership of your home for as long as you live in it, pay property taxes, and maintain homeowners insurance.
Myth #2 – You must make monthly loan payments.
Unlike a traditional mortgage, reverse mortgages don’t require monthly payments. Your loan balance is repaid when you sell the home, move out, or pass away, and this allows you to use the mortgage to cover expenses without the added burden of monthly payments.
Myth #3 – Reverse mortgages are only for people who are experiencing financial trouble.
While it’s true that reverse mortgages can provide relief for those in need, they are not exclusively for people facing financial hardship. Many retirees leverage a reverse mortgage as part of their overall financial plan, using it to supplement retirement income, pay for healthcare, or even fund home improvements.
Myth #4 – You can’t leave anything to your heirs.
While the loan does need to be repaid when you pass away, your heirs can choose to pay off the loan and keep the home or sell the home to settle the debt. In many cases, your heirs still have equity left in the home even after the loan is repaid.
Understanding the truth about reverse mortgages is key to making wise financial decisions for your unique situation and needs. If you have questions about reverse mortgages, our team is happy to assist you and provide the accurate information you need.