Myth: "Property Ownership Exchange"
Fact: When a homeowner obtains a government insured HECM Reverse Mortgage on their home this in turn establishes a mechanism for home equity access that is much easier to qualify for than a traditional forward loan. Many people, including advisors and realtors, have somehow been led to believe that this is a trade. In other words, an easy qualifying non-recourse loan insured by the government in exchange for the government assuming ownership of the home.
This is completely false. There is no such exchange and the Deeds of trusts are used similar to traditional mortgages and the homeowner(s) remain on title as the sole owner(s) of the property with full ownership rights.
To take it one step further, this also means that any appreciation in the property inures to the homeowner. Conversely, if the property were to decline in value the homeowner would then have less equity but there would be no adverse effect on their locked-in benefits at closing for their Reverse Mortgage.
Reverse Mortgages are complex but don’t allow myths and skepticism to cloud potential opportunity. For more, reverse mortgage myths debunked, see our page Reverse Mortgage Myths Busted!