Page 1 - AAG037_Myths and Realities Flyer

MYTHS & REALITIES

of a reverse mortgage loan

As with many financial products, reverse mortgage loans can be
complicated and there are a number of misconceptions about how the
product works. Do you know the myths vs. the realities?

MYTH NO. 1 The lender owns the home. MYTH NO. 4 The home must be free and clear of any
existing mortgages.
p Like all mortgage loans, the reverse mortgage
loan is secured by a lien and you will not lose your p Actually, many borrowers use the reverse
home as long as you continue to meet the loan mortgage loan to pay off an existing mortgage and
obligations. The loan obligations include: living in the eliminate monthly mortgage payments. Paying off
home, maintaining the home according to the Federal the existing mortgage and any other liens is required
Housing Administration requirements, paying property as part of the loan. It is the borrower’s responsibility
taxes and paying the homeowner’s insurance. to continue to pay for property taxes, homeowners
insurance and home maintenance.

MYTH NO. 2 Once loan proceeds are received, you
pay taxes on them. MYTH NO. 5 Only people with financial hardships
need reverse mortgages.
p Like any loan, reverse mortgage proceeds are
paid out tax-free as they are not considered income. p The perception that reverse mortgage loans are
However, it is recommended that you consult your only for “financially strapped” borrowers is changing
financial advisor and appropriate government - affluent senior borrowers with multi-million dollar
agencies for any effect on taxes. homes and healthy retirement
assets are using reverse
mortgage loans as part of
MYTH NO. 3 The borrower is restricted on how to use their financial and estate
the loan proceeds. planning, and are working
closely in conjunction
p The proceeds from a reverse mortgage loan can be with financial
used used for almost any purpose. Many borrowers professionals and
use it to supplement their retirement income, delay estate attorneys
receiving social security benefits, pay off large to enhance their
expenses, pay for medical expenses, remodel their overall quality and
home, or help their adult children. Prudence along with enjoyment of life.
budgeting should be the proper approach to enjoying
proceeds received from your reverse mortgage loan.
Tom Selleck
American Advisors Group Paid Spokesperson
“Bringing Stability to Your Retirement”

For more information call (xxx) xxx-xxxx today.