by Travis Schultz, Owner and Licensed Mortgage Broker, Smart Mortgage
Are reverse mortgages not all they’re cracked up to be? Can they truly add the stability you need for financial planning and your retirement, or are they just another way to steal away your home, equity or inheritance? Since the product began back in 1989, local Prescott reverse mortgage expert Travis Schultz at Smart Mortgage says we may be surprised with the honest truth behind the reverse mortgage!
- No mortgage payments for life? – (True) As long as either spouse considers the property as his or her primary home, they can live there for life paying zero mortgage payments.
- All applicants must be 62 years old or older – (False) Only one spouse needs to be 62 years old. The other spouse may be younger.
- You must own your home outright – (False) You may already have an existing mortgage, which can be refinanced and paid off with a reverse mortgage.
- Other family can also live in the home with no mortgage payment – (True) Any additional family is also able to live in the home with no mortgage payments, as long as one owner of the property resides in the home.
- The income or cash I receive is not taxable – (True) Any money you receive, whether monthly, a cash sum or in a home equity line is all nontaxable to do with as you wish.
- You must have good credit and income for a reverse mortgage – (False) Since reverse mortgages do not require a mortgage payment, almost anyone with any type of credit and income may be eligible.
- Once into the reverse mortgage you are locked into it, permanently – (False) The reverse mortgage is simply a loan recorded against the property, just like every other mortgage. You retain full ownership, so at any time you can move, sell or refinance the property simply by paying off the mortgage balance.
- If I take out a reverse mortgage, I will leave nothing for my family – (False) Reverse mortgages have insurance automatically built in to protect the family. Most homes continue to increase in value over time, leaving even more equity for family. Even if property values decrease below what is owed, the family can acquire the property for 5 percent less than market value, regardless of how much is owed or how low the value may be. No other program offers this.
- I can only own the one home – (Myth) As long as the home with the reverse mortgage is maintained as your primary residence, Smart Mortgage allows you to own as many other properties as you wish.
- You can only get a reverse mortgage on a one-unit home – (False) Smart Mortgage also allows reverse mortgages on manufactured homes, duplexes, triplexes, fourplexes, townhomes and condos, as long as one unit is considered your primary residence.
- My family will be responsible for the debt – (False) The reverse mortgage is a non-recourse loan, so if your value ever falls below what you owe, your family will never have to pay the deficiency.
- The government or lender will own my home – (False) The reverse mortgage is simply a lien recorded against the property, just like any other mortgage. The homeowner(s) remains on title and has full ownership. The owner(s) may also add other family members or place the home in a trust, so family automatically has ownership in the property and equity, as well.
- You can purchase a home using a reverse mortgage – (True) Smart Mortgage allows you to purchase a primary home and the financed amount has no payments for life.
Travis Schultz is the owner of Smart Mortgage in Prescott, Arizona and is a licensed mortgage broker. Travis can be reached at (928) 445-9499.