Reverse Mortgage Misconception

Reverse mortgage lenders have also had to dispel the popular notion that borrowers have to sign over ownership of their home to the lender or that the equity in the home is lost to any heirs if the owner dies -- no matter how much has been drawn. Neither is true. The lender holds a first mortgage security interest in the home -- as in a traditional mortgage -- while the senior homeowner retains full title to the property.

Bell says that what makes reverse mortgages, which have been offered since the late 1960s, so appealing is the fact that senior retirees can continue to live in their homes while turning their equity into cash. Unlike a traditional or forward mortgage or home equity loan, there are no payments -- monthly or otherwise -- as long as the borrower remains in the home, and the loan doesn't have to be repaid until the last borrower dies or moves out of the house.

When that happens, the estate, the heirs or the homeowners themselves, if they are still living, have a full year to sell the property and pay off the reverse-mortgage holder.

And thanks to insurance mandated by the federal government for certain reverse mortgages, borrowers or their heirs may never owe more than the house is worth, regardless of how much interest has accumulated over the years.

Find out how much you qualify for with a reverse mortgage by calling 1-888-973-8377 or visiting our free online analysis form.