1. Reverse Mortgage
Misconceptions
Terry Cronin of The Kent Group
1S443 Summit Ave., Suite #301
C: 630-207-1524
P: 630-396-7800
F: 630-396-7808
Consult your financial advisor and appropriate government agencies for any effect on taxes or government benefits. Consolidating debt may result in higher overall
interest cost over the life of the loan. Consult your financial advisor on paying short term debt with your mortgage loan. Make sure you understand the features
associated with the loan program you choose and the effect of an adjustable rate to your overall loan cost. Advisor and/or broker/correspondents are independent
entities and do not form legal partnership or agency relationships with Financial Freedom.

2. Reverse Mortgage Myths 2
As reverse mortgages continue to grow in popularity, so have a
range of myths about these unique loans. Let’s take a look at
some of the most common misconceptions and discuss the facts.
1. The bank takes away OR I will lose my house
2. The home must be debt free to qualify for a reverse mortgage
3. The bank sells the home when the reverse mortgage becomes due
4. My children won’t be comfortable with me obtaining a reverse
mortgage
5. The borrower could end up owing more than the house is worth
6. Reverse mortgage proceeds will impact Social Security and Medicare
benefits
7. There are restrictions on how the money is used and taxes will have
to be paid on it
8. Reverse mortgages are only for seniors in need, or for the ‘house
rich, cash poor’

3. Myth #1: The bank takes away OR I will lose my house 3
FACT: With a reverse mortgage, the borrower retains
title to the home throughout the life of the reverse
mortgage:
• The borrower cannot, as a result of the reverse
mortgage, be forced out of his or her home as long as
property taxes and hazard insurance are paid, the home
is maintained in reason living condition, and at least one
borrower resides the home as their primary residence.
• The loan must be repaid once the last borrower
permanently moves out of the home.

4. Myth #2: The home must be debt free to qualify for a 4
reverse mortgage
FACT: Reverse mortgages convert home equity into
cash. As long as there is sufficient equity in the
property, the homeowner may be eligible for a
reverse mortgage. In fact, many seniors use a reverse
mortgage to pay off an existing mortgage in order to
eliminate a required monthly mortgage payment.

5. Myth #3: The bank sells the home when the reverse 5
mortgage becomes due
FACT: The borrower is in control of the home and
retains title, not the bank or lender. So while it’s
common for the borrower or the heirs to sell the
home to repay the loan, it’s a decision the borrower
or the heirs make. The borrower or the heirs might
also refinance the home in order to repay the loan.

6. Myth #4: My children won’t be comfortable with me 6
obtaining a reverse mortgage
FACT: Seniors are encouraged to talk with their
children about reverse mortgages. Many baby
boomers are faced with trying to plan for their
retirement and pay for their children’s education.
Often, the children of many seniors are happy that
their parents have a financial solution available to
help them live more independently and financially
secure.

7. Myth #5: The borrower could end up owing more than the 7
house is worth
FACT: Two of the great built in safeguards of reverse
mortgages are that they are structured so that the
borrower can never owe more than the fair market
value of the home upon repayment*. In addition,
HECM products are insured by the Federal Housing
Administration, an arm of the U.S. Department of
Housing and Urban Development (HUD).
*If the borrower or the heirs want to keep the house by refinancing the debt
and paying off the reverse mortgage, the borrower or heirs must payoff the
balance in full, regardless of the value of the property. If the last borrower
has moved out of the property and the property will be sold in an arm’s
length transaction, the property may be sold for the fair market value and
neither the borrower’s estate nor the heirs will be responsible for a deficiency
balance.

8. Myth #6: Reverse mortgage proceeds will impact Social 8
Security and Medicare benefits
FACT: A reverse mortgage will generally not affect
regular Social Security payments or Medicare benefits.
Depending upon the borrower’s situation, a reverse
mortgage may affect benefits one receives, if any,
from the Federal Supplemental Security Income (SSI)
program, or state-administered programs like
Medicaid. It is recommended that the borrower speak
with his or her financial advisor and appropriate
governmental agencies.

9. Myth #7: There are restrictions on how the money is used 9
and taxes will have to be paid on it.
FACT: Actually there are no restrictions. The cash
proceeds from a reverse mortgage can be used for
almost any purpose and since it’s already your
money, it’s tax-free. Many seniors have used reverse
mortgages to travel, pay off debts, help their kids,
make a luxury purchase or just live more comfortably.

10. Myth #8: Reverse mortgages are only for seniors in need, or 10
for the ‘house rich, cash poor.’
FACT: Reverse mortgages are an excellent financial
planning tool that has been used by homeowners
from all walks of life to enhance their retirement
years. In fact, with the new 2009 lending limit, many
seniors are benefiting from increased cash benefit
from a reverse mortgage.

11. Come On In…The Process is Easy 11
1. Contact me, Terry Cronin
2. Discuss and review benefit illustration
3. Set up an appointment with a HUD approved housing
counselor
4. Complete application
5. Order FHA appraisal
6. If loan is approved, all outstanding conditions must be
cleared
7. Draw loan documents
8. Three day right of rescission
9. Loan funds, documents are recorded and proceeds are
disbursed as instructed

12. Find out if a reverse mortgage can help you live a 12
brighter future!