Your home must be debt-free to qualify.
FALSE. If you have an outstanding mortgage or equity loan balance, and as long as there is enough equity, you may be able to pay off your mortgage and qualify for a Reverse Mortgage. All current mortgages, judgments or liens must be paid from the Reverse Mortgage proceeds and are then added to your Reverse Mortgage balance. A Reverse Mortgage specialist will advise you of the amount you qualify to receive and if your current mortgage balances cause a shortfall. Even if there is a shortfall and you owe money at closing in order to pay off your current mortgage, you are permitted to do so.
Only senior homeowners who are low on cash can benefit from a Reverse Mortgage.
FALSE. Seniors from all walks of life are taking advantage of Reverse Mortgages. Even though some borrowers may have greater needs than others, a Reverse Mortgage can be an excellent financial or estate planning tool for anyone. Homeowners with high-value homes are using Reverse Mortgages in a variety of ways. Protecting their estate from some of the estate tax after their passing can be accomplished with a reverse mortgage since a reverse mortgage places a lien on the property, and that lien is not subject to estate tax. (Consult with your tax advisor.)
Only those borrowers with excellent credit and income can qualify for a Reverse Mortgage.
FALSE. Although there will be a Financial Assessment to determine whether a reverse mortgage borrower can pay the taxes and homeowner's insurance (and other fees) on their home, you can still obtain a Reverse Mortgage once approved. Your credit does not have to be perfect, and a certain credit score is not required. But there are certain parameters required by HUD and lenders in order to pass the financial assessment.
Bankruptcy, foreclosure, and judgments prevent you from obtaining a Reverse Mortgage.
FALSE. Borrowers who are currently in bankruptcy or foreclosure may be able to secure a Reverse Mortgage. Your bankruptcy trustee may give you permission for the Reverse Mortgage to go forward. But you must show you've been on time with your bankruptcy payments for 12 months. You will have to obtain approval from the court to go forward with the reverse mortgage. And depending on how you have paid your real estate taxes and your credit profile show on your credit report, you may be required to have a LESA, Life Expectancy Set Aside so your lender will be able to pay your real estate taxes and homeowner's insurance for the life of the loan (your life expectancy). (Consult with your attorney and the courts for more information).
I will have to make monthly payments if I have a Reverse Mortgage.
FALSE. With a Reverse Mortgage, you never make any monthly mortgage payments. However, if your desire is to preserve the equity in your home for your heirs, you can choose to make mortgage payments of any amount at any time throughout the year.