Nations Lending: The Opposite of a “Forward” Mortgage is a…?
Our borrowers sometimes ask us what is true and not true about reverse mortgages. What are the most common reverse mortgage myths and facts? For lenders in the reverse mortgage market, explaining the benefits of this loan program to a borrower and undermining the myths upfront will allow for a smoother and more successful transaction.
One of the common misconceptions Nations Lending borrowers have is that the lender owns the home. As an eligible borrower for a reverse mortgage, the borrower will retain the title and ownership of the home throughout the life of the loan, so long as they continue to maintain the property, pay property taxes and homeowners insurance and continue to live in the home.
Another common misconception is that the home must be free and clear of any existing mortgages. Many borrowers who use Nations Lending often use a reverse mortgage to pay off an existing debt or current mortgage in order to eliminate monthly payment, resulting in more financial freedom.
Loan proceeds are also tax-free from a reverse mortgage and there are not restrictions on how the proceeds can be used as they can be used for any reason. For example, borrowers may use the money to supplement their retirement income, pay for medical expenses, remodel their home, pay for a family member’s college education, etc. Income and credit are also not determinants of whether or not you qualify for a reverse mortgage.
Our borrowers are reminded that a reverse mortgage could be utilized as part of financial and estate planning as borrowers with robust retirement assets even obtain a reverse mortgage to enhance their financial standing. The reverse mortgage market may also be on the rise as more people begin to turn 62 and look for a way to financially prepare for retirement.