Reverse mortgage is a federally insured product that is designed specifically to meet the needs of old retired people. It provides a financial benefit to them until they pass away. There is a number of old retired people who avail the benefit of a reverse mortgage and lead their remaining life happily. This, however, is not the case with a large number of people. According to the statistics published by the National Reverse Mortgage Lenders Association (NRMLA), only 48,902 people from all over the US bought the reverse mortgage in 2016.
These low sales of the reverse mortgage are because people are not very well informed about it and thus believe in the myths that are created by ignorant people. Here we aim to dispel three of those common myths.
Myth #1 – Banks Can Take Away Your Home
In a reverse mortgage, the title document remains with the borrower. This means that the home legally belongs to the borrower only; however, the home will be considered as the bank’s collateral. The lender can sell the house to recover their lent money only after the borrower expires.
Myth #2 – Your Payments Will Be Taxed
The payments that you receive will not be treated as income when you file your income tax return with the IRS. They are in fact treated as a loan, a liability. Since the loan payments that you receive are exempted from any sort of taxes you won’t be paying any tax on the reverse mortgage payments.
Myth #3 – You Need a Good Credit History for Reverse Mortgage
No lender would care about the credit rating of the borrower since the borrower will not repay the loan, rather the house of the borrower will be sold by the bank to recover the loan only after the borrower passes. This is why the reverse mortgage provider will diligently assess the fair values of the house rather than assessing the credit score of the borrower.
Longbridge financial is a lending company that specializes in reverse mortgages and is approved by the Federal Housing Administration (FHA). It operates in 46 states and is committed to providing financial peace of mind to the elder generation.
