Golden Gateway Financial Debunks Ten Emerging

Tag : Home Repair Tools
As reverse mortgagescontinue to grow in popularity so have the various myths andmisconceptions surrounding them, making it more important than everfor borrowers to obtain clear and unbiased information aboutreverse mortgages. To help dispel some of these reserve mortgagemisconceptions, Golden Gateway Financial, the Web's mostcomprehensive financial resource for seniors and retirees, todayshared the truth behind ten of the most common reverse mortgagemyths.
"Getting a reverse mortgage is an important financial decision thatinvolves both the head and the heart," said Eric Bachman, founderand CEO of Golden Gateway Financial. "It's important to share thetruth behind reverse mortgage myths so that seniors and theirfamilies can accurately weigh both factors. We are committed toensuring that families have the right information so that they canmake well-informed decisions about reverse mortgages andretirement."
Myth: The Bank Owns Your Home in a Reverse Mortgage
Reality: This is the most commonly held reverse mortgagemisconception. The bank never owns your home. The reverse mortgageborrower retains title as long as they live in the home, just asthey would with a traditional mortgage.
Myth: Reverse Mortgages are Costly
Reality: Today's economy and tough credit markets mean that mostseniors in need of cash are faced with a choice between a reversemortgage and downsizing their home. In that scenario, there reallyis no choice. For example, securing a reverse mortgage on a$350,000 home nets approximately $9,000 in savings versus just thetypical cost of selling and moving from that same home.
Myth: Older Borrowers Qualify for More Money with a ReverseMortgage
Reality: This is certainly true as long as home prices stay levelor appreciate, but in a down market, waiting can wipe outage-related reverse mortgage gains. A recent study of senior financing options showed that given the average US decline in home value over thepast year, an individual who secured a reverse mortgage one yearago earned more up-front cash than an individual ten years olderwould have earned today.
Myth: You Must Own Your Home "Free and Clear" to Qualify For aReverse Mortgage
Reality: It is true that a borrower needs to have some equity intheir home to qualify for a reverse mortgage, but it is notnecessary to own the home "free and clear." In fact, a reversemortgage can be used to pay off the balance on a current mortgagein order to reduce monthly debt.
Myth: Your Heirs Will Be Responsible for Paying Off the Balance ofthe Mortgage
Reality: A reverse mortgage is a non-recourse loan, meaning thatyou can never owe more than the current value of your property. Thefederal government insures the loan so that lenders are protectedagainst this potential loss and so that you or your heirs are neverresponsible for more than the current market value of your home, nomatter how much money you receive. Although your heirs will not beresponsible for repayment, they will have the option of repayingthe loan and buying the house for themselves.
Myth: Government Required Counseling Will Protect You and YourInterests
Reality: While helpful, government-required loan counseling forreverse mortgage borrowers should not be considered all-inclusive.Consumers should always engage in their own research and reviewindependent, lender agnostic tools and resources such as the award-winning reverse mortgage calculator found at Golden Gateway Financial to identify the products thatare best for their unique situation. You may also wish to consultyour financial advisor.
Myth: Reverse Mortgages are Largely a Safety Net for DesperatePeople
Reality: For many, reverse mortgages serve as a valuable financialplanning tool, allowing them to live fuller lives with additionalincome. By augmenting social security and other retirement incomesources, seniors can better afford to enjoy their retirement. Savvyinvestors also see it as an alternative to tapping other retirementassets that could trigger higher taxes.
Myth: All Reverse Mortgages Are Insured by the FHA
Reality: This is not true. The large majority of reverse mortgagesare standard federally insured products, but lenders may developand offer their own loans. Some lenders offer jumbo loans forlarger reverse mortgages on more expensive homes that exceed theFHA lending limit.
Myth: Poor Credit Will Affect Your Chances of Securing a ReverseMortgage
Reality: The only requirements for a reverse mortgage are that yoube 62-years or older, that you maintain residence in your home, andthat you keep it insured and in repair. A reverse mortgage has noincome, credit or health requirements. In fact, many seniorcitizens use a reverse mortgage to combat bankruptcy or evenforeclosure.
Myth: A Reverse Mortgage is Taxable Income and Affects SocialSecurity
Reality: This is not the case. Proceeds from a reverse mortgage arenot taxable because they are considered a loan, not income. Youshould consult your tax advisor if you have any questions aboutyour unique circumstances.