Reverse Mortgage Misconceptions in Las Vegas, Nevada

Misconception #3

THE BANK OWNS THE HOME AFTER YOU GET A REVERSE MORTGAGE.

INCORRECT.

You own your home and retain title throughout the life of the reverse mortgage. Once you permanently move out of your home or pass it to your estate, the loan must be repaid.

Am I required to receive counseling before I get a reverse mortgage?

Yes. Counseling, one of the safeguards of reverse mortgages, is required for all three current reverse mortgage products before you can obtain a loan. Counseling is an educational session at which you are informed about reverse mortgages and your other options.

Is the money from a reverse mortgage taxable income? Will it affect my Social Security benefits or other government benefits?

Funds from a reverse mortgage are tax-free; it’s your money, not additional income. A reverse mortgages does not affect regular Social Security or Medicare benefits. To assess the impact, if any, on other federal or state assistance or medical programs, you may wish to consult with your local Area Agency on Aging (to locate, call 1-800-677-1116, or visit http://eldercare.gov), a reverse mortgage lender, or a tax attorney.

Who owns title to my home while my reverse mortgage is outstanding – the bank or me?

You retain title to your home during the period when you have a reverse mortgage, just the same as with a regular home purchase mortgage.

Am I required to pay anything during the course of the reverse mortgage loan?

No. The flow of payments is reversed during the term of the reverse mortgage – the lending institution pays you. However, you are responsible for keeping up payments for your homeowner’s insurance and property taxes, and to maintain the condition of your home.

Are there any limits on how I can use the funds from a reverse mortgage?

No. Borrowers have spent the funds from reverse mortgages for a variety of purposes. Among these have been to pay health care expenses, supplemental retirement income, home improvements, home modifications, higher education, gifts to others, and long term care insurance premiums. Some have used a reverse mortgage to purchase recreational vehicles, start a small business, and travel the Amazon. Some have used reverse mortgages to eliminate expenses by paying off mortgages and credit card debt. The only limit on how you use a reverse mortgage is your imagination.