Counseling Debunks Myths

Common Myths Debunked usually in the impartial counseling session.

A reverse mortgage can be a valuable retirement planning tool that can greatly increase retirees income streams by using their largest assets: their homes. A reverse mortgage allows homeowners to borrow against their home’s equity, while still maintaining ownership of the home. There are plenty of old, some true Reverse Mortgage Pros, Cons, Myths. They can be asked to your impartial counseling or to your loan officer.

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The best part about a reverse mortgage is that unlike conventional mortgages, there are no payments involved. Instead, the lender makes payments to the borrower either through a lump sum, monthly payments, or a line of credit.

The reverse mortgage is repaid when the borrower dies, permanently moves from the residence, or the property is sold. Instead of you paying the bank monthly and the equity in your home growing, the bank pays you monthly, and the equity may shrink. It is important to know that you must be 62 to qualify.

HOW CAN A REVERSE MORTGAGE BENEFIT ME? A reverse mortgage can be a powerful source of funding for individuals who need to increase their income to be comfortable in retirement. The largest personal asset most retirees possess is their home. In many cases, a retiree’s home is paid off. A reverse mortgage increases income without increasing monthly payments and allows a retiree to stay in his or her home.

If you are at least 62 and considering a reverse mortgage, the amount you will be eligible for is based on several things, most importantly, the value of your home, your age, and interest rates. You will be eligible for more money the older you are, the more your home is worth, and the lower current interest rates are.

NEGATIVE ASPECTS OF REVERSE MORTGAGES. Among the negatives of a reverse mortgage are the costs involved. All mortgages have costs, but reverse mortgage fees, which can include the interest rate, loan origination fee, mortgage insurance fee, appraisal fee, title insurance fees, and various other closing costs, are extremely high when compared with a traditional mortgage. Costs vary but can be as high as $10,000-$15000. This cost is not paid out of pocket, but rolled into the loan.

Another potential issue to be aware of is the requirement to pay back the loan if you should permanently move out of the home. This may not sound like a problem now, but if you ever need to enter a full-time care facility, the loan would become due if you left your home for a year or more.

The final downside to the reverse mortgage affects your estate. The reverse mortgage will almost always decrease the equity in your home, which will leave less money to your heirs.

REVERSE MORTGAGE PROS, CONS, MYTHS — AND THE TRUTH. Myths s about reverse mortgages may cause homeowners to avoid consideration of these complex loans. Or, eligible seniors might proceed too hastily without realizing all the possible repercussions of their financial decisions. Here are a few wrong ideas and realities about this real estate option.

Myth: The lender takes title to the home. Truth: You still retain ownership of your home. The reverse mortgage is only a lien against the property.

Myth: The loan can exceed the value of the property, sticking you or your heirs with a large bill when you eventually leave your home. Truth: A reverse mortgage is a “non-recourse” loan, which means that you, your heirs, or your estate will never owe more than the appraised value of the home at loan maturity.

Myth: You can’t get a reverse mortgage if you currently have a conventional mortgage. Truth: Although this is true, you can get a reverse if you use the proceeds to pay off your existing mortgage at close.

Myth: A reverse mortgage can cause you to be evicted from your home.

Truth: You leave your home when you choose. No one will force you from your home. The reverse mortgage is not due until your home is no longer your primary residence.

You are required by law now to have your spouse on the title and deed, so they don’t have problems if one spouse passes away.

The eviction stories are mainly based on people trying to keep their spouse off the deed and title, or someone not paying their taxes and insurance. We are extremely clear about this with several pages of the application devoted to this.

For more information on exactly how a Reverse Mortgage works and can benefit you as well as Reverse Mortgage Pros, Cons, Myths call Scott Underwood with Reverse Mortgage Alabama. I have been working only with Reverse Mortgages in Alabama since 2007. Reach Scott personally by callingBirmingham 205-908-2993, 256-677-9767, or 251-333-4200, or email Reverse Mortgage Alabama@gmail.com.

This information, Reverse Mortgage Pros, Cons, Myths is brought to you by books for dummies- A Wiley Brand

The Counseling answers your most common reverse mortgage questions during HECM Counseling session. It is also mandatory to help protect seniors from being uninformed about their decision. When you are ready, I’m Birmingham a local. From an educational standpoint, Home Equity Conversion Mortgage (HECM) counselors are the first line of defense in the ongoing struggle to dispel the most common reverse mortgage myths and misconceptions.

Despite this dual effort on the educational front, and the wide variety of positive press from the mainstream media lately, several reverse mortgage illusions have yet to evaporate into the ether.

Borrowers, in fact, still own their homes. One of the most common misconceptions of reverse mortgages is that borrowers automatically relinquish ownership of their homes once they obtain a HECM.

Perhaps the result of negative media representation in the past, the lingering effect of this myth has obscured the truth about reverse mortgages among the public. The reality is often a pleasant revelation for seniors once they undergo HECM counseling.

“Seniors are under this misconception that they don’t own the home anymore—the lender does,” said Sherry Tetreault, a Tenn.-based certified credit counselor with Clear Point Credit Counseling.

Although many Birmingham, Alabama prospective borrowers from sessions, Tetreault, who has been a credit counselor for 16 years and a HECM counselor for seven years, admits that the misunderstanding about the transfer of home ownership continues to be one of the most frequently asked questions during the counseling process.

“They are always surprised to learn they still, in fact, own the home even with a reverse mortgage,” she said.

No payments necessary? The internet provides a wealth of knowledge on just about anything. With a few keystrokes and clicks, even unsavvy web browsers can find the most basic information on reverse mortgages to aid them in their quest for knowledge.

Unfortunately, not everything published on the internet is vetted for accuracy. So, it’s not beyond reason to be naturally suspicious of financial products that offer extra cash flow without requiring a monthly payment in return.

“Most of the time, when seniors are coming for counseling, they are skeptical about why they are able to get this [reverse mortgage] loan and not have to make payments,” Tetreault said.

Tetreault’s job then is to clarify that the funds obtained from a reverse mortgage must be repaid later, and that just because borrowers aren’t required to make monthly payments toward the loan balance, they are still required to maintain their property taxes and homeowner’s insurance.

Clarifying what makes the reverse mortgage become due and payable creates some surprise among prospective borrowers, Tetreault said, but it also opens the door to other questions that seniors might not have thought about previously, such as what happens if they do not pay property taxes and insurance payments on time.

“We talk about what their responsibilities are as reverse mortgage borrowers to make sure they do not put themselves at risk of foreclosure,” she said.

The million-dollar question- HECM counseling is a necessary stepping stone in the older homeowner’s journey to get a reverse mortgage. This decision is typically prompted by a significant need, whether that is the result of an unexpected personal issue or even the intrigue of using home equity to supplement retirement wealth.

In many cases, the million-dollar question is: how much money can I get from a reverse mortgage? Call Birmingham’s Reverse Mortgage Guy; serving Birmingham and much of Alabama since 2007.

One of the things Clear Point Couneling does off-the-bat is ask how they plan to use the money they receive from a reverse mortgage; whether that means using these funds for daily or future expenses, paying off debt, etc.

In understanding what the loan proceeds will be used for, Tetreault said counseling can help prospective borrowers determine if a reverse mortgage is really the right product for them, or if there are other alternatives that might fit best with their financial plans.

At the end of the day, the decision to get a reverse mortgage hinges upon education and the awareness of what other resources are available to seniors that can help them accomplish their personal needs.

“Education empowers consumers,” Tetreault said. “Whether seniors take that information and decide to get the reverse mortgage or not, at least they are educated and understand all the choices and options available to them.