No, the lending bank does not take control of your home’s title. You do not relinquish ownership of your home by using a reverse mortgage loan. Instead, you are borrowing against the value of your home’s equity. Just like with any other mortgage loan, as long as you maintain your home, pay property taxes and insurance and otherwise abide by the terms of the loan, you continue to own your property.
As with any other major financial decision, be sure the lender you work with is reputable and trustworthy. Lincoln Chris, your Reverse Mortgage Specialist and advisor, can help you decide if a reverse mortgage loan is a good option for your situation.
I’ve heard that a reverse mortgage loan is a scam.
Just like most financial products, a reverse mortgage loan is highly regulated by the Federal Government. A Home Equity Conversion Mortgage (HECM) type reverse mortgage is even insured by the Federal Housing Administration (FHA). A reverse mortgage is a great way, as you enter your golden years, to make use of the equity you have in your home to:
- Pay off your current mortgage, so that you no longer need to make house payments
- Downsize to and purchase a smaller home
- Pay unexpected healthcare costs, make home improvements, afford a significant purchase, or have a rainy day fund
- Create a monthly paycheck (for the lifetime of the borrower, or for a specific amount of time)
However you decide to use the money from your reverse mortgage, the funds are tax-free. You will never need to make monthly payments on your home again (as long as you live in it and continue to pay property-related taxes, insurance and upkeep.)