Is there any truth to the argument that the bank owns your home if you do a reverse mortgage?
Actually, there is nothing different about a reverse mortgage, compared to a traditional mortgage when it comes to ownership. Your home becomes the collateral for the bank with either loan. Because you still own the home, you retain all the ownership rights. You are allowed to sell or refinance without any penalty at any time. In the event that you choose to sell your home, the lender will need to be paid off and any remaining equity will go to you or your heirs.
Sometimes the confusion about who owns the home is because of a life estate. Investors will buy your home and let you live in it for the rest of your life rent free. They do this in hopes that when they have possession of the property, it can be developed profitably. This is not the same as a reverse mortgage, and these programs are not related.
Just to clarify another point before you have to ask, the State does not take your home either. As long as you maintain your property taxes, you will be in their good graces. By the way, if you live in Oregon, you can have your property taxes deferred. Don’t do it before you get your loan, or you will have to pay them off. But instead, do the reverse mortgage and after that is complete, you can defer your property taxes.
Recapping, you keep ownership of your home. A reverse mortgage will never require you to give it up. The right to sell or refinance, while keeping any remaining equity, and do with it as you please, will always be yours.
In the event of your passing, the same rules apply to your heirs. They will inherit the home along with the mortgage and remaining equity. If they choose to keep it, they will need to refinance it or pay it off. If they decide to sell the home, they will keep any remaining equity after the loan is paid back and any fees associated with the property.
Before committing to any reverse mortgage programs, get the facts. Visit our website for more reverse mortgage information. There is also a free reverse mortgage calculator to see how much money is available to you.
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