Reverse Mortgage Myths
Clearing Up Common Misconceptions
1) “A reverse mortgage requires giving up ownership of your home.”
False. As the borrower, your name remains on the title and the home is still yours—just as it would be with any mortgage. You’re required to continue paying real estate taxes, homeowner’s insurance, and providing basic maintenance to your home. Once you no longer live in the home as your primary residence, the loan balance, including interest and fees, must be repaid.
2) “A reverse mortgage should only be used as a last resort.”
False. Many homeowners age 62 and older are now using a reverse mortgage strategically as part of a sound financial plan. For example, a reverse mortgage line of credit can serve as a cash reserve that you can tap as needed.
“There are restrictions on how I can use the money from a reverse mortgage.”
False. Reverse mortgage proceeds can be used in multiple ways. Among the most common uses are paying off an existing mortgage or other debt in order to have no monthly mortgage or debt payments; creating a cash reserve; supplementing monthly income, paying for home improvements, or covering medical bills or long-term care expenses.
4) “I could wind up owing more than my house is worth with a reverse mortgage and leave my heirs with debt.”
False. A HECM (Home Equity Conversion Mortgage) reverse mortgage is insured by the Federal Housing Administration. This insurance feature guarantees that you will never owe more than the value of your home when the loan becomes due. No debt will be left to your heirs.
5) “Reverse mortgages are too complicated.”
Not so. With most financial products, there are several factors to consider before you can choose what’s best for you. With Ocean Lending, you can rely on your Loan Consultant to be a trusted resource for clear information and responsible guidance. In addition, before you apply for a government-insured Home Equity Conversion Mortgage, you are required to receive reverse mortgage counseling from a third-party counselor who’s approved by the U.S. Department of Housing and Urban Development (HUD).