Understanding the Protections & Safeguards of a Reverse Mortgage
It is perfectly natural for people to be tentative or apprehensive when they encounter something with which they are unfamiliar. This perfectly describes the initial reaction many people have to the idea of a reverse mortgage. At the surface, nothing about a reverse mortgage seems to make sense. It seems to oppose everything we have ever understood about a mortgage; therefore, the natural conclusion is that a reverse mortgage must be a “risky proposition” or “too good to be true.”
In reality, it is just the opposite. A reverse mortgage has more safeguards as part of this loan than would likely be found in any other mortgage or financial transaction in which a senior might enter. Below we will discuss the common misconceptions about a reverse mortgage, and the homeowners’ reverse mortgage protections.
Your Ownership is Protected in a Reverse Mortgage
Probably the most common misconception is that when seniors enter into reverse mortgages, they are signing over the ownership of their home to the lender. This is not the case.
A reverse mortgage is a first deed of trust mortgage, like most any other mortgage they have ever had. In all cases, the borrower remains the owner of the home, and the lender simply has a lien on the property that is used to secure the mortgage.