There are plenty of misconceptions that swirl around a reverse loan. If you’re interested in trying it out but the horror stories scare you away, here are a few of the most common questions, answered to shed some light on this popular financial tool.
Do I have to own my home?
If you still have a balance on your mortgage but you have enough equity, then you can use a part of the money you get from this mortgage to pay for what you owe. Once that’s done, you can use the rest any way you wish.
Do I have to have good credit to apply?
Your credit standing or credit history isn’t even going to matter. So if you have a bad one, no worries. The only thing that could put a wrench in the works is if you have back taxes, which you can pay off, again, using the money from the loan.
Who typically uses this loan?
Most people think reverse mortgages are for the poor or for seniors who weren’t financially smart enough to plan for their retirement. Nothing could be further from the truth. This loan is a great financial product, and it’s becoming a pretty handy retirement tool for seniors who want to have the security of a financial backup.
Am I living off borrowed money?
No. The money from the loan is already yours. It’s just tied to your home equity.
Do I need to make monthly payments?
No, you don’t, says Aging Care. As long as you live in the home, you won’t have to pay off the loan.
Do my heirs pay for anything?
No, they don’t. Once you pass away, your house and property are put up for sale. The proceeds from that sale will cover all the costs of the loan. So you won’t have to worry about leaving your heirs with outstanding debts.