Since 2002, older homeowners have used a reverse mortgage to retain ownership of their homes while supplementing their retirement income. Particularly important for emergency situations, reverse mortgages have allowed seniors to use this government regulated program to pay for health care expenses, make home modifications, or simply establish a cash reserve.

However, despite increased popularity, the most basic facts about reverse mortgages are often misunderstood by these same older folks. According to some industry experts, the short history of this industry and a rapid product evolution have deluged consumers with information that at times is confusing or inaccurate, and, even sometimes, purposefully misleading!

The most common misconception about reverse mortgage lenders is that a reverse mortgage allows a bank to give the elderly recipients money and then take their house. Of course, the United States government would never have drafted, passed, and begun to regulate a lending scenario that would allow this to happen.

The Home Equity Conversion Mortgage (HECM) is FHA’s reverse mortgage program which enables seniors to withdraw some of the equity in their home. They choose how to withdraw funds, whether in a fixed monthly amount or a line of credit or a combination of both. Those recipients can also use a HECM loan to purchase a primary residence if they are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property being purchased.

According to Peter Bell, President of the National Reverse Mortgage Lenders Association “That couldn’t be further from the truth. Our mission is to inform seniors about the benefits of reverse mortgages so that they can make empowered decisions about whether this product makes sense for their own particular situation. A reverse mortgage helps people to address their retirement needs.”

This most common questions, including cons and disadvantages, that consumers ask about an hecm loan , with the answers can be found at a variety of online sources. The questions frequently asked usually concern 1) those appropriate to ask before getting a reverse mortgage, 2) those applicable during a reverse mortgage, and 3) those applicable at the end of a reverse mortgage.