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A HECM Reverse Mortgage provides benefits that are guaranteed and tax-free* to pay off debts, cover long term health care, make home improvements or supplement your retirement income. Unfortunately, many people have misconceptions about H.E.C.M. Reverse Mortgages. The answers to these HECM myths will help you see why so many people are using a Reverse Mortgage to make their lives more comfortable and more secure. * Please consult your tax advisor for all tax advice.
HECM Myth #1
You are selling your house back to the bank. Just like traditional home loans, whatever you borrow, plus interest, must be repaid; but not until the end of a Reverse Mortgage. You keep title to your home and may move, sell or pay the HECM loan back at any time.
HECM Myth #2 You can be forced out of your home. You cannot be forced out of your home because with a HECM Reverse Mortgage, you are guaranteed to retain ownership of your home for life; however, just as in the past, you will continue to be responsible for your home’s maintenance, your own property taxes and homeowners insurance.
HECM Myth #3 Your home must be Free-and-clear to qualify. Even if you have a first mortgage or other debt, you may qualify; however, H.E.C.M. Reverse Mortgage proceeds must first be used to pay off any debts that are against your home.
HECM Myth #4 There are income qualifications that may disqualify you. Reverse Mortgages are not welfare, there are no income qualifications at all. A HECM Reverse Mortgage loan amount is based on your age, the value of your home and current interest rates.
HECM Myth #5 You will lose your Medicare and Social Security benefits. Money you receive from a HECM Reverse Mortgage is a loan, not income; therefore, your Medicare and Social Security benefits are not effected.
HECM Myth #6 Your heirs won’t inherit anything. You, your spouse and your heirs never forfeit your hard earned equity. When you and your spouse both pass-on, your heirs can sell the house and use the proceeds to repay the amount you borrowed, plus interest, or they can keep the house by repaying the HECM loan through any other means.
HECM Myth #7 You will have to make a monthly payment. There is never any monthly payment to make. The HECM loan becomes due at the end, which is when you move, sell or pass away. Any payments you do decide to make will simply reduce the amount owed at the end of your Reverse Mortgage.
HECM Myth #8 Manufactured Homes don’t qualify for a Reverse Mortgage. HECM Reverse Mortgages are not limited to “stick built” homes. You can receive a H.E.C.M. Reverse Mortgage on manufactured housing, condominiums and some multi-family dwellings as well.
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