SOURCE: Golden Gateway Financial

July 01, 2008 08:06 ET

Golden Gateway Financial Debunks Ten Emerging and Common Reverse Mortgage Myths

As Falling Home Values Erase Some Long-Held Reverse Mortgage Rules of Thumb, Customers Continue to Subscribe to Both New and Existing Reverse Mortgage Myths

OAKLAND, CA--(Marketwire - July 1, 2008) - As reverse mortgages continue to grow in popularity so have the various myths and misconceptions surrounding them, making it more important than ever for borrowers to obtain clear and unbiased information about reverse mortgages. To help dispel some of these reserve mortgage misconceptions, Golden Gateway Financial, the Web's most comprehensive financial resource for seniors and retirees, today shared the truth behind ten of the most common reverse mortgage myths.

"Getting a reverse mortgage is an important financial decision that involves both the head and the heart," said Eric Bachman, founder and CEO of Golden Gateway Financial. "It's important to share the truth behind reverse mortgage myths so that seniors and their families can accurately weigh both factors. We are committed to ensuring that families have the right information so that they can make well-informed decisions about reverse mortgages and retirement."

Myth: The Bank Owns Your Home in a Reverse Mortgage

Reality: This is the most commonly held reverse mortgage misconception. The bank never owns your home. The reverse mortgage borrower retains title as long as they live in the home, just as they would with a traditional mortgage.

Myth: Reverse Mortgages are Costly

Reality: Today's economy and tough credit markets mean that most seniors in need of cash are faced with a choice between a reverse mortgage and downsizing their home. In that scenario, there really is no choice. For example, securing a reverse mortgage on a $350,000 home nets approximately $9,000 in savings versus just the typical cost of selling and moving from that same home.

Myth: Older Borrowers Qualify for More Money with a Reverse Mortgage

Reality: This is certainly true as long as home prices stay level or appreciate, but in a down market, waiting can wipe out age-related reverse mortgage gains. A recent study of senior financing options showed that given the average US decline in home value over the past year, an individual who secured a reverse mortgage one year ago earned more up-front cash than an individual ten years older would have earned today.

Myth: You Must Own Your Home "Free and Clear" to Qualify For a Reverse Mortgage

Reality: It is true that a borrower needs to have some equity in their home to qualify for a reverse mortgage, but it is not necessary to own the home "free and clear." In fact, a reverse mortgage can be used to pay off the balance on a current mortgage in order to reduce monthly debt.

Myth: Your Heirs Will Be Responsible for Paying Off the Balance of the Mortgage

Reality: A reverse mortgage is a non-recourse loan, meaning that you can never owe more than the current value of your property. The federal government insures the loan so that lenders are protected against this potential loss and so that you or your heirs are never responsible for more than the current market value of your home, no matter how much money you receive. Although your heirs will not be responsible for repayment, they will have the option of repaying the loan and buying the house for themselves.

Myth: Government Required Counseling Will Protect You and Your Interests

Reality: While helpful, government-required loan counseling for reverse mortgage borrowers should not be considered all-inclusive. Consumers should always engage in their own research and review independent, lender agnostic tools and resources such as the award-winning reverse mortgage calculator found at Golden Gateway Financial to identify the products that are best for their unique situation. You may also wish to consult your financial advisor.

Myth: Reverse Mortgages are Largely a Safety Net for Desperate People

Reality: For many, reverse mortgages serve as a valuable financial planning tool, allowing them to live fuller lives with additional income. By augmenting social security and other retirement income sources, seniors can better afford to enjoy their retirement. Savvy investors also see it as an alternative to tapping other retirement assets that could trigger higher taxes.

Myth: All Reverse Mortgages Are Insured by the FHA

Reality: This is not true. The large majority of reverse mortgages are standard federally insured products, but lenders may develop and offer their own loans. Some lenders offer jumbo loans for larger reverse mortgages on more expensive homes that exceed the FHA lending limit.

Myth: Poor Credit Will Affect Your Chances of Securing a Reverse Mortgage

Reality: The only requirements for a reverse mortgage are that you be 62-years or older, that you maintain residence in your home, and that you keep it insured and in repair. A reverse mortgage has no income, credit or health requirements. In fact, many senior citizens use a reverse mortgage to combat bankruptcy or even foreclosure.

Myth: A Reverse Mortgage is Taxable Income and Affects Social Security

Reality: This is not the case. Proceeds from a reverse mortgage are not taxable because they are considered a loan, not income. You should consult your tax advisor if you have any questions about your unique circumstances.

For more information about reverse mortgages or to access Golden Gateway Financial's industry leading suite of online retirement assessment tools and resources, please visit http://www.goldengateway.com.

About Golden Gateway Financial

Golden Gateway Financial, located in Oakland, California and at http://www.goldengateway.com, is a comprehensive resource for senior citizens, baby boomers and soon-to-be retirees to assess their financial health at retirement. Through a unique set of online tools and clear and unbiased communication, the company helps individuals address The Great American Retirement Dilemma in order to better assess how secure their nest egg really is and then make intelligent choices to eliminate money concerns and fully enjoy what should be the best years of their lives. The company also operates the industry's premiere reverse mortgage service with a proprietary reverse mortgage calculator and a team of trained counselors to help seniors better understand the product, evaluate whether it is right for them, and then research the perfect lending partner. Golden Gateway Financial is an advocate for seniors, helping them find the answers and resources necessary to spend their retirement financially secure and with complete peace of mind.

Contact Information

  • Press Contact:
    Michael Azzano
    Cosmo PR for Golden Gateway Financial
    415.596.1978
    Email Contact