Reverse Mortgages: Part Two

Top Eight Reverse Mortgage Misconceptions

1) I'll have to sign over the title, and the bank/lender will own my home.
As a homeowner, you never relinquish title to your home when taking out a reverse mortgage.

2) The bank will take my house when I use up my reverse mortgage funds and I'll be thrown out of it.
The purpose of a reverse mortgage is to help you stay in your home. It does not become due until the last surviving borrower permanently leaves the home, regardless of the balance of funds. The only exception is if you violate one of the terms of the loan (e.g. fail to pay homeowners insurance or property taxes, transfer the title to another name, or allow the home to fall into disrepair).

3) When my reverse mortgage comes due, the bank/lender will sell my house.
While the repayment typically comes from the sale of the home, that's determined by you or your estate. If the home is sold, your and your estate pays the reverse mortgage balance and keeps any remaining funds.

4) I'll owe more than my home is worth, passing debt onto my children.
Reverse mortgages are non-recourse loans, which means that the debt cannot be passed down to heirs. If the home is worth less than the loan balance, you only repay the current value of the home.

5) I won't qualify because of my bad credit or lack of income.
Income and credit scores are not determining factors for reverse mortgages. The lender only conducts a minimal credit check for identity-verification purposes and to satisfy government and investor guidelines.

6) I'm not eligible because I don't own my home free and clear.
You may qualify, even with a first or second mortgage on the home. Any existing mortgage debt will be paid off first with the proceeds from your reverse mortgage. You receive any remaining funds.

7) The bank/lender will take part of my home's future appreciation.
Prior to HUD's involvement in the reverse mortgage industry in the late 1980's, some loans did have a "shared appreciation" clause. However, we do not offer any reverse mortgages with this type of clause.

8) I don't need a reverse mortgage - I am not poor!
Reverse mortgages are not only for those with financial needs, but for those who simply want to improve their standard of living or make plans for their estate.

Don't hesitate to call Donna at (214) 360-9505 or visit Ascot Mortgage Services online for more information about home financing or investment properties in Texas.