There are several misconceptions circulating about reverse
mortgages. Despite the suggestions from the America Association of Retired
Persons, the concept of obtaining a reverse mortgage worry a lot of seniors. It’s
even made worse by friends or family who say that reverse mortgages are bad without
even presenting enough evidence to back up their claims.
The truth about the myths surrounding reverse mortgages.
Reverse mortgage lead to houses being taken away from the borrowing senior.
This is one of the most common misconception about this kind
of mortgage loan. This is not true. As a matter of fact, the senior borrower
would continue to have ownership of the house that’s under the reverse
mortgage program. This homeownership is made much more secured by the lien
that’s placed upon the property, just like any other type of mortgage. It will
guarantee that the lender would also be repaired form the owed amount, getting
rid of the threat of the house getting removed from the senior borrower.
Since the majority of reverse mortgages are FederalHousing Administration Home Equity Conversion Mortgage (HECM) types. The US
government guarantees full protection by using the mandatory 3% insurance fee
that’s payable on all the FHA reverse mortgages.
The other types of reverse mortgages are referred to as
Proprietary Reverse Mortgage and the Federal National Mortgage Association.
These are guaranteed and safe by the private lenders.
Reverse Mortgage Is Costlier Than Other Types of Mortgages
This is not true. The closing cost of a reverse mortgage is
only 1% higher than an FHA mortgage when obtained on the exact same property.
Traditional mortgages tend to charge at least 2%.
The interest rate also plays a crucial role. Although the
prime rates are used by conventional mortgages as their base, the FHA reverse
mortgage interest rate will depend on the one year UnitedStates Treasury Note. This simply implies that the interest rate made
through the reverse mortgage is way lower than a conventional mortgage.
The Home Will Be Given To The Lender Once The Borrower Dies
It is not true that the lender will take your home once you
die or if you decide to relocate or sell the house. It actually follows the
exact same procedure as a typical mortgage where the home equity goes to the
heirs of the borrowers or the estate.
A reverse
mortgage loan will have the estate pay the reverse mortgage lender the home
value during the time of repayment. The exact same thing will apply in the case
of significant decrease in the home value or when the borrower will reach
extreme old age.
Tax Can Be Imposed On A Reverse Mortgage
It’s also not true that tax can be imposed on a reverse
mortgage loan and that health insurance and Social security will be affected by
the loan terms. Always remember that a reverse mortgage is a loan and not an
income.
In case you need to know more about reverse mortgages and the benefits it has to offer, call Reverse Mortgage Specialist now.
David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/
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