Reverse Mortgage Misconceptions

How Much Do You Understand About Reverse Mortgages?

According to a recent survey of 1,003 people aged 55-75 who were asked the following 10 true/false questions, most people know less than they think they do about reverse mortgages. How many of these statements do you have misconceptions about?

  • True
    The earliest age at which a person who is the sole owner of a home can enter into a reverse mortgage is age 62.
  • False
    If the value of your home has grown since you bought it, entering into a reverse mortgage would result in a taxable gain to the homeowner.
  • True
    Under a reverse mortgage the homeowner generally is not required to repay the loan until he/she strops using the home as the principal residence.
  • False
    You cannot enter into a reverse mortgage unless your home is completely paid off and there is no outstanding mortgage balance.
  • False
    One downside with a reverse mortgage is that if the home goes under water (the home is worth less than the amount owed to the lender), the homeowner, estate, or heirs need to pay off the additional debt.
  • False
    The only currently available form of payment from a reverse mortgage is a single lump sum distribution.
  • True
    The amount of money that you can borrow as a reverse mortgage depends on the age of the youngest borrower or eligible non-borrowing spouse, the current interest rate, and the value of the home.
  • False
    A reverse mortgage is different from a traditional mortgage in that the home owner is not responsible for any property taxes or insurance payments.
  • True
    Generally using a reverse mortgage early in retirement to support a retirement plan is better than as a last resort toward the end of retirement.
  • False
    Because of concerns about poor money management and financial elder abuse, the Government has restricted the use of reverse mortgage proceeds to health care expenditures, long-term care costs, home improvements, and tax payments.