Tired of the conflicting opinions surrounding reverse mortgages? It’s time to get the real story. Reverse mortgages have been around for over 50 years, offering a unique financial tool for some homeowners. But they’re not right for everyone. Let’s dive into four key truths to help you cut through the noise and make informed decisions.

Truth #1: A Reverse Mortgage is Still a Loan

Think of it like this: you can sell your home to access your equity, but then you have to move! A reverse mortgage lets you tap into that equity without packing your bags.

Here’s the deal: the lender gives you a portion of your equity as cash, monthly payments, or a line of credit. In exchange, you’ll owe them the borrowed amount plus interest when the loan ends.

Here’s the catch:

• You must live in the home as your primary residence.
• Keep your home in good shape.
• Stay current on property taxes, homeowner’s insurance, and HOA fees.

The good news? No monthly mortgage payments! As long as you meet the loan terms, you don’t have to repay until you die or permanently move out.

Remember: It’s a loan, not a freebie. You will have to repay eventually.

Truth #2: You Still Own Your Home!

Don’t believe the myth that you lose your home with a reverse mortgage. You absolutely retain the title! The lender simply places a lien on the property, just like with a traditional mortgage, to ensure they get repaid. Once the loan is repaid, the lien disappears.

Important Note: If you don’t uphold the loan terms, the lender could foreclose. But as long as you meet your obligations, your name stays on the title, and you remain the homeowner.

Truth #3: Reverse Mortgages Aren’t for Everyone

Reverse mortgages can serve various purposes, from creating a financial safety net to supplementing income. But they’re not a last-ditch solution for everyone.

Why? Because you need to prove you can afford it! Lenders require a financial assessment to ensure you can meet the loan terms. This includes:

• Meeting the age requirement (typically 62 or older).
• Demonstrating the ability to pay property taxes, insurance, and other expenses.
• Having sufficient equity in your home.

Truth #4: Your Heirs Don’t Inherit the Debt

When the loan ends (usually upon the borrower’s death), it needs to be repaid. This can be done through selling the home or other means. But here’s the important part: your heirs won’t be personally responsible for the debt.

Even better: Federally insured reverse mortgages (HECMs) and some private ones are non-recourse loans. This means if the loan balance exceeds the home’s value, the lender can’t go after your heirs for the difference.

The Bottom Line:

Reverse mortgages are a powerful tool, but they require careful consideration. Talk to a financial advisor to see if they align with your financial situation and goals.

Ready to explore your options? Contact me today for a free consultation!

Chenine Lozano, Real Estate Finance Expert W: (562) 620-7662 C: 562-762-7511 NMLS #1655101 DRE#02069548 Endeavor Mortgage NMLS#355050