Council on Aging Answers 2016 - 78

Myths and Facts
About Reverse Mortgages
COUNCIL ON AGING - ORANGE COUNTY

FINANCE & LEGAL

Have you heard about reverse mortgages, but
aren't quite sure if they're legitimate or a scam? Are
you wondering if one is right for you or an older
homeowner you know?
Also known as Home Equity Conversion Mortgages (HECMs), reverse mortgages have become increasingly popular in recent years. As a result, many
misconceptions have sprung up. Reverse mortgages
can be a useful financial tool for older homeowners,
but they're not for everyone. Before considering one
of these loans, it pays to know the myths and facts.

Myth #1: A reverse mortgage works the same as
any other type of home loan.
A reverse mortgage is a special type of loan for
homeowners aged 62 and older that lets you convert
a portion of the equity in your home into cash. But
unlike a traditional home equity loan or second
mortgage, you don't have to repay the loan until you
either no longer live in the home as your principal
residence or you fail to meet the obligations of the
mortgage.
Taking out a reverse mortgage is a big decision,
since you may not be able to get out of this loan
without selling your home to pay off the debt. You
also need to carefully consider your options to avoid
using up all the equity you have built up in your
house.
Myth #2: Most reverse mortgage borrowers
use their loan funds for vacations and other fun
things.
The truth is that most borrowers today use their
loans for immediate needs, such as paying off their
existing mortgage or other debts. About 33% of
homeowners who consider these loans want to supplement their monthly income, so they can afford to
continue living in their own home longer.
Myth #3: Reverse mortgages are too expensive.
Taking out any home loan can be costly because of
origination fees, third-party closing charges (such as

78

Answers Guide 2016	

an appraisal, title search, and recording costs), and
servicing fees. You can pay for most of these costs as
part of the reverse mortgage loan.
Borrowers who select a traditional HECM Standard reverse mortgage also must pay a hefty upfront
FHA mortgage insurance premium that can be as
much as 2% of the value of their home. But this insurance guarantees that you will receive the expected
loan payments. In addition, you (or your heirs) don't
have to repay more than the value of the home, even
if the amount due is greater than the appraised value.
Myth #4: Reverse mortgages should only be used
as a last resort.
It's never a good idea to make a financial decision
under stress. Waiting until a small issue becomes a
big problem reduces your options. If you wait until
you are in a financial crisis, a little extra income each
month probably won't help. Reverse mortgages are
best used as part of a sound financial plan, not as a
crisis management tool.
If you live on a limited income, there are many
public and private benefits that can be an alternative

COUNCIL ON AGING - ORANGE COUNTY IS A 501 (C)3 NONPROFIT CORPORATION.
TO DISTRIBUTE
ANSWERS FREE OFResource
COST, WE MUST SELL
ADVERTISING SPACE.| WHILE
WE APPRECIATE THE PAID
LISTINGS IN ANSWERS, THEIR
Aging
and Disability
Connection
800-510-2020
| www.adrcoc.org
INCLUSION DOES NOT IMPLY A RECOMMENDATION OR ENDORSEMENT OF PRODUCTS OR SERVICES BY COAOC. ALWAYS BE A VIGILANT CONSUMER. VERIFY INFORMATION AND SEEK REFERENCES WHERE APPROPRIATE.



Table of Contents for the Digital Edition of Council on Aging Answers 2016

Contents
Council on Aging Answers 2016 - Intro
Council on Aging Answers 2016 - Cover1
Council on Aging Answers 2016 - Cover2
Council on Aging Answers 2016 - 1
Council on Aging Answers 2016 - Contents
Council on Aging Answers 2016 - 3
Council on Aging Answers 2016 - 4
Council on Aging Answers 2016 - 5
Council on Aging Answers 2016 - 6
Council on Aging Answers 2016 - 7
Council on Aging Answers 2016 - 8
Council on Aging Answers 2016 - 9
Council on Aging Answers 2016 - 10
Council on Aging Answers 2016 - 11
Council on Aging Answers 2016 - 12
Council on Aging Answers 2016 - 13
Council on Aging Answers 2016 - 14
Council on Aging Answers 2016 - 15
Council on Aging Answers 2016 - 16
Council on Aging Answers 2016 - 17
Council on Aging Answers 2016 - 18
Council on Aging Answers 2016 - 19
Council on Aging Answers 2016 - 20
Council on Aging Answers 2016 - 21
Council on Aging Answers 2016 - 22
Council on Aging Answers 2016 - 23
Council on Aging Answers 2016 - 24
Council on Aging Answers 2016 - 25
Council on Aging Answers 2016 - 26
Council on Aging Answers 2016 - 27
Council on Aging Answers 2016 - 28
Council on Aging Answers 2016 - 29
Council on Aging Answers 2016 - 30
Council on Aging Answers 2016 - 31
Council on Aging Answers 2016 - 32
Council on Aging Answers 2016 - 1a
Council on Aging Answers 2016 - 1b
Council on Aging Answers 2016 - 33
Council on Aging Answers 2016 - 34
Council on Aging Answers 2016 - 35
Council on Aging Answers 2016 - 36
Council on Aging Answers 2016 - 37
Council on Aging Answers 2016 - 38
Council on Aging Answers 2016 - 39
Council on Aging Answers 2016 - 40
Council on Aging Answers 2016 - 41
Council on Aging Answers 2016 - 42
Council on Aging Answers 2016 - 43
Council on Aging Answers 2016 - 44
Council on Aging Answers 2016 - 45
Council on Aging Answers 2016 - 46
Council on Aging Answers 2016 - 47
Council on Aging Answers 2016 - 48
Council on Aging Answers 2016 - 49
Council on Aging Answers 2016 - 50
Council on Aging Answers 2016 - 51
Council on Aging Answers 2016 - 52
Council on Aging Answers 2016 - 53
Council on Aging Answers 2016 - 54
Council on Aging Answers 2016 - 55
Council on Aging Answers 2016 - 56
Council on Aging Answers 2016 - 57
Council on Aging Answers 2016 - 58
Council on Aging Answers 2016 - 59
Council on Aging Answers 2016 - 60
Council on Aging Answers 2016 - 61
Council on Aging Answers 2016 - 62
Council on Aging Answers 2016 - 63
Council on Aging Answers 2016 - 64
Council on Aging Answers 2016 - 2a
Council on Aging Answers 2016 - 2b
Council on Aging Answers 2016 - 65
Council on Aging Answers 2016 - 66
Council on Aging Answers 2016 - 67
Council on Aging Answers 2016 - 68
Council on Aging Answers 2016 - 69
Council on Aging Answers 2016 - 70
Council on Aging Answers 2016 - 71
Council on Aging Answers 2016 - 72
Council on Aging Answers 2016 - 73
Council on Aging Answers 2016 - 74
Council on Aging Answers 2016 - 75
Council on Aging Answers 2016 - 76
Council on Aging Answers 2016 - 77
Council on Aging Answers 2016 - 78
Council on Aging Answers 2016 - 79
Council on Aging Answers 2016 - 80
Council on Aging Answers 2016 - 3a
Council on Aging Answers 2016 - 3b
Council on Aging Answers 2016 - 81
Council on Aging Answers 2016 - 82
Council on Aging Answers 2016 - 83
Council on Aging Answers 2016 - 84
Council on Aging Answers 2016 - 85
Council on Aging Answers 2016 - 86
Council on Aging Answers 2016 - 87
Council on Aging Answers 2016 - 88
Council on Aging Answers 2016 - 89
Council on Aging Answers 2016 - 90
Council on Aging Answers 2016 - 91
Council on Aging Answers 2016 - 92
Council on Aging Answers 2016 - 93
Council on Aging Answers 2016 - 94
Council on Aging Answers 2016 - 95
Council on Aging Answers 2016 - 96
Council on Aging Answers 2016 - 97
Council on Aging Answers 2016 - 98
Council on Aging Answers 2016 - 99
Council on Aging Answers 2016 - 100
Council on Aging Answers 2016 - 101
Council on Aging Answers 2016 - 102
Council on Aging Answers 2016 - 103
Council on Aging Answers 2016 - 104
Council on Aging Answers 2016 - 105
Council on Aging Answers 2016 - 106
Council on Aging Answers 2016 - 107
Council on Aging Answers 2016 - 108
Council on Aging Answers 2016 - 109
Council on Aging Answers 2016 - 110
Council on Aging Answers 2016 - 111
Council on Aging Answers 2016 - 112
Council on Aging Answers 2016 - 113
Council on Aging Answers 2016 - 114
Council on Aging Answers 2016 - 115
Council on Aging Answers 2016 - 116
Council on Aging Answers 2016 - 117
Council on Aging Answers 2016 - 118
Council on Aging Answers 2016 - 119
Council on Aging Answers 2016 - 120
Council on Aging Answers 2016 - 121
Council on Aging Answers 2016 - 122
Council on Aging Answers 2016 - 123
Council on Aging Answers 2016 - 124
Council on Aging Answers 2016 - 125
Council on Aging Answers 2016 - 126
Council on Aging Answers 2016 - 127
Council on Aging Answers 2016 - 128
Council on Aging Answers 2016 - 129
Council on Aging Answers 2016 - 130
Council on Aging Answers 2016 - 131
Council on Aging Answers 2016 - 132
Council on Aging Answers 2016 - 133
Council on Aging Answers 2016 - 134
Council on Aging Answers 2016 - 135
Council on Aging Answers 2016 - 136
Council on Aging Answers 2016 - 137
Council on Aging Answers 2016 - 138
Council on Aging Answers 2016 - 139
Council on Aging Answers 2016 - 140
Council on Aging Answers 2016 - 141
Council on Aging Answers 2016 - 142
Council on Aging Answers 2016 - 143
Council on Aging Answers 2016 - 144
Council on Aging Answers 2016 - 145
Council on Aging Answers 2016 - 146
Council on Aging Answers 2016 - 147
Council on Aging Answers 2016 - 148
Council on Aging Answers 2016 - 149
Council on Aging Answers 2016 - 150
Council on Aging Answers 2016 - 151
Council on Aging Answers 2016 - 152
Council on Aging Answers 2016 - 153
Council on Aging Answers 2016 - 154
Council on Aging Answers 2016 - 155
Council on Aging Answers 2016 - 156
Council on Aging Answers 2016 - 157
Council on Aging Answers 2016 - 158
Council on Aging Answers 2016 - 159
Council on Aging Answers 2016 - 160
Council on Aging Answers 2016 - 161
Council on Aging Answers 2016 - 162
Council on Aging Answers 2016 - Cover3
Council on Aging Answers 2016 - Cover4
https://www.nxtbook.com/nxtbooks/coaoc/coa_answers2017
https://www.nxtbook.com/nxtbooks/coaoc/coa_answers2016
https://www.nxtbook.com/nxtbooks/coaoc/coa_answers2015
https://www.nxtbook.com/nxtbooks/freedom/coa_answers2014
https://www.nxtbook.com/nxtbooks/freedom/seniorguide2013
https://www.nxtbook.com/nxtbooks/freedom/seniorguide2012
https://www.nxtbook.com/nxtbooks/freedom/seniorguide2011
https://www.nxtbookmedia.com