Reverse mortgages can often be misunderstood, surrounded by myths that can make homeowners hesitant to explore them as a financial option.
Whether you’re planning for retirement, supporting family members, or simply looking to improve your lifestyle, a reverse mortgage can be a powerful tool when used wisely. Our team at Mortgage Connection wanted to tackle some of the most common misconceptions about reverse mortgages and set the record straight.
Common Reverse Mortgage Misconceptions
1. “You no longer own your home”
False
A reverse mortgage is a collateral charge, similar to a traditional mortgage. The homeowner retains full ownership and can remain in the home as long as they choose. The loan is repaid when the property is sold or refinanced, with no need for requalification.
2. “You’ll owe more than your home is worth”
False
Equitable Bank reverse mortgages include a No Negative Equity Guarantee, which ensures that the amount owed will never exceed the fair market value of the home at the time of sale.
3. “You can’t pass on your home”
False
The home can still be passed on to heirs. They have the option to repay the reverse mortgage and retain ownership, just as they would with any other mortgage.
4. “It’s only for people in financial distress”
False
Reverse mortgages are used by a wide range of clients for various purposes, including lifestyle upgrades, gifting, renovations, and travel. They are not limited to situations of financial hardship.
5. “You cannot make a payment on a reverse mortgage”
False
Reverse mortgages are payment-optional. Clients can choose to make payments at any time, in any amount, or not at all, depending on their financial goals.
6. “Reverse mortgages are hard to exit”
False
Clients can repay or refinance a reverse mortgage at any time, subject to the prepayment provisions outlined in the mortgage agreement.
Get Advice from Your Trusted Mortgage Brokers
As with any major financial decision, it’s important to speak with a qualified mortgage professional who can help you understand your options and tailor a solution that fits your goals.
If you’d like to learn more or explore whether a reverse mortgage is right for you, reach out to our team at Mortgage Connection.
