With the economy in decline and retirement savings dwindling, many seniors are considering reverse mortgages. Unfortunately, myths about these home loans prevent some seniors from receiving the funds that could make a big difference in their lives. Here is the truth about the top 5 reverse mortgage myths.
Myth 1: The bank takes the house OR the borrower can lose the house.
In October, 2008, HUD announced that it has greatly increased the reverse mortgage loan limit. These new limits are a boon to senior citizens interested in receiving more retirement income, especially for those whose retirement investment portfolios have significantly declined in value. Unlike a traditional home equity mortgage, a reverse mortgage isn’t repaid until you permanently vacate your home, sell your home, or die.
Increased Reverse Mortgage Loan Limits
Prior to November 1, 2008, reverse mortgage loan limits ranged between $200,160 in regions with low home values and $362,790 in regions with the highest home values. Now there is a single loan limit of $417,000 for federally insured reverse mortgages issued through HUD’s Home Equity Conversion Mortgage program.
If you are considering getting a reverse mortgage, you may be finding the information you see a bit confusing. As with any other big decision, it’s important that all your questions are answered thoroughly before you choose to take out this type of loan. Below are answers to some of the questions consumers often ask about these mortgages.
What are reverse mortgages? How do they work?
Reverse mortgages are loans that allow homeowners age 62 and older to convert part of their home equity into tax-free income. These loans do not require the homeowner to make monthly payments, sell or give up title to the home.
Wisconsin Reverse Mortgage