Reverse Mortgage Myths


1) You Sign Over Ownership to the Bank
Wrong! As the borrower, you still maintain legal ownership to the home. The HECM lender will simply have a lien on the home. You can do whatever you wish with the home as long as you still live in the home and maintain the home.

2) You May Lose the Home
As long as you are current on your taxes, insurance and HOA payments, you keep ownership of the home. You will need to maintain reasonable maintenance of the home. Even after all of the equity of the home has been paid out, the bank can't force you to sell the home or take it over. Only when the borrower leaves the home or passes on will the bank be repaid.

3) At the End, Bank Gets the Home
Wrong again! The bank is only repaid in full. Once the loan is due, the borrower or the borrower's estate can keep the home by repaying the bank the balance of the reverse mortgage that was taken out.

4) You May End Up Owing More Than The Home Is Worth
While this is certainly a possibility, the FHA insurance protects borrowers and the bank in this case. If the home value has decreased, the FHA insurance kicks in and makes up the difference.

5) Reverse Mortgage Will Affect My Social Security
Since a reverse mortgage is considered a loan, it will not have any affect on your social security payments. A reverse mortgage may affect medicaid or other public assistance program. Talk to your adviser to make sure you fully understand the impact should you fall into this area.