Reverse mortgages can be complex financial products, and there are several misconceptions associated with them.

Here are some of the most common misconceptions about a reverse mortgage.

It's a scam.

This is a widespread misconception. Reverse mortgages are legitimate financial tools regulated by government agencies to protect consumers.  Prior to applying for a Reverse Mortgage, it is a requirement that you attend counseling to ensure that you understand the financial responsibilities involved as well as the potential risks.  This is a requirement determined by the US Department of Housing and Urban Development (HUD).

The lender will own your home.

One huge misconception is that you will lose title to your home and the lender will take your home away.    This is not true, a Reverse Mortgage is like a conventional forward mortgage and the homeowner will still remain on title.  The RM is simply a loan against the equity of the home.

You can lose your home.

Like a regular forward mortgage, if you fulfill your obligations, such as paying property taxes and homeowners insurance, and living in the home as your primary residence, you can't lose your home due to a reverse mortgage.

Only low-income seniors qualify.

Reverse mortgages are available to homeowners of various income levels. Eligibility is primarily based on age, home value, and equity, not income.  Many affluent Seniors are using a Reverse Mortgage as a financial tool in their estate planning. 

You must have no mortgage or own your home outright.

While having no mortgage allows you to access more funds, you can still obtain a reverse mortgage if you have an existing mortgage. The reverse mortgage is used to pay off the existing loan, and you can access the remaining equity.  As a rule of thumb, you should have 50% equity or more in your home.  If you own less than 50% the proceeds from a Reverse Mortgage may not cover the balance of your mortgage(s).

You can't get a reverse mortgage if you have bad credit.

Credit score generally does not impact eligibility for a reverse mortgage since no monthly mortgage payments are required. The focus is on home equity and loan requirements.   Homeowners should be current on all mortgage payments, property taxes, insurance payments and maintenance fees, if applicable.

You can owe more than your home is worth.

Reverse mortgages are non-recourse loans, meaning you or your heirs won't be responsible for repaying more than the home's appraised value at the time of repayment, even if the loan balance exceeds the home's worth.

You lose all home equity.

Reverse mortgages allow you to tap into a portion of your home equity while retaining ownership. You or your heirs may still have equity remaining after repaying the loan.

Reverse mortgages are only for desperate or desperate seniors.

Reverse mortgages can be a valuable financial tool for retirees seeking to supplement their income, cover healthcare expenses, or fund other needs. It's not limited to desperate situations.

You can't leave your home to heirs.

Upon your passing, your heirs have the option to repay the reverse mortgage and keep the home or sell the property and use the proceeds to repay the loan. They retain the remaining equity after loan repayment.

It's important to consult with a qualified reverse mortgage counselor or financial advisor to fully understand the intricacies and potential benefits and drawbacks of reverse mortgages based on your specific situation.