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Reverse Mortgage Myths—Common Misconceptions

Separating Financial Fact From Fiction.

Over the years, there have been many misconceptions and an overall lack of understanding about what reverse mortgages are, and how you can use them.

At Crown Reverse Mortgage Financial, we’re committed to educating consumers about the many uses of this powerful financial tool. So we created this helpful Mythbusters section to help you realize what’s true and false.

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8 August, 2021

Celia Avery

“I was very nervous about this, as you can imagine. It’s a big financial decision. However, In just 15 minutes of talking to Brian on the phone, I felt calm. That’s the highest praise I can give. 5/5!”

MARIA-Home Equity Conversion Mortgage

"Someone told me that with a reverse mortgage, the bank takes your home."


That’s fortunately a complete MYTH: you own your home. Not the bank or lender.

𝐓𝐡𝐚𝐭’𝐬 𝐓𝐑𝐔𝐄: 𝐲𝐨𝐮𝐫 𝐡𝐞𝐢𝐫𝐬 𝐜𝐚𝐧 𝐢𝐧𝐡𝐞𝐫𝐢𝐭 𝐭𝐡𝐞 𝐡𝐨𝐦𝐞.

Your heirs inherit the house, just as they would with any other mortgage. When the loan comes due, they can decide what to do to repay the loan balance. They can:

Arrange their own financing, pay off the loan, and keep the house for themselves

Sell the house and pay off the balance, keeping any extra funds

Or they can do nothing with the house and deed it to the lender

That’s a MYTH: it was designed to help people stay in their homes.

Reverse mortgages were created specifically to allow seniors to live in their home for the rest of their lives. Because the homeowner typically receives payments from a reverse mortgage— instead of making payments to a lender—the homeowner can never be evicted or foreclosed upon for non-payment. However, it is the homeowner’s responsibility to maintain the home in good condition, keep property insurance current, and pay property taxes.

"I heard you shouldn’t get a reverse mortgage unless you’re desperate."


John lrg

That’s a MYTH: a reverse mortgage is a powerful tool—not a last resort.

A reverse mortgage is a powerful financial tool that can be an important part of your overall financial plan. 

From paying off an existing mortgage to delaying social security, or even creating an emergency line of credit, it’s a flexible product that gives you options. 

In fact, with recent changes and the security of the U.S. Department of Housing and Urban Development’s FHA insurance, many financial planners have begun to discuss reverse mortgages. They are turning to clients who need additional sources of retirement income.

That’s TRUE: those benefits are generally unaffected by a reverse mortgage.

Government entitlement programs such as Social Security and Medicare are not affected by a reverse mortgage—however, need-based programs such as Medicaid may be. To stay eligible for Medicaid, you’d need to manage how much you take from the reverse mortgage per month to ensure you don’t exceed Medicaid limits. Consult a qualified financial advisor to learn how a reverse mortgage may impact your eligibility for some government benefits.

That’s a MYTH: they don’t require large out-of-pocket expenses.

Mortgage loan origination costs and interest rates are comparable to those of traditional mortgages. There are FHA insurance costs that some traditional mortgages don’t require, but the insurance benefits are well worth the relatively small cost. Typically, lender closing costs and fees can be financed into the loan, so there’s little required out of pocket.

MARIA-Home Equity Conversion Mortgage

"Will I have to pay taxes on the reverse mortgage?"


That’s a MYTH: the proceeds are not considered income, and are NOT taxable.

The cash you receive from a reverse mortgage is your loan; it’s not your income.

You see, the money from a reverse mortgage comes from your home’s equity. This already belongs to you, so it’s not considered income. 

Plus, the interest on a reverse mortgage can be tax-deductible when it’s repaid. Consult your tax advisor for more information. To learn more about common misconceptions regarding reverse mortgages,

Here’s what people like you are saying about us.

"When I began working with Brian, I had an idea in mind about what I wanted to do regarding consolidating debt to reduce interest rates and allow for more cash flow. In the spirit of exceptional service, Brian didn’t simply respond to and process my wishes, but shared with me several different options which would help me achieve my goals more effectively, unlike other financial institutions that merely returned a solution which was not really in my best interest. Once the final solution was determined, Brian and team continued to work hard for and with me to get the best rate and deal possible by counseling me on how to increase my credit score in short order and then by interacting with the agencies on my behalf to update their records just in time."
Geoff and Debbie S.
"Brian always made me feel at ease, was easy to communicate with and by the end of my first purchase with Brian I knew for a fact he had my best interest at heart. I have since done three transactions with him and I know he always fights to get me the best deal and protects my interests at all costs. "
Frank & Debbie V.
"Purchasing or refinancing a home is such a personal and often stressful experience, things seem to come down to the last 31 days and when the process greatly affects you and your family, emotions can run high. In the age of online offers and refinancing with a click of the button I have been burned before. In Brian I have an individual on my financial team that I can trust completely and that is priceless."
Denise G.
"I was lucky in that Brian was a good friend of the family when we took on the process of purchasing a family home. Then I found out that I was even more lucky than I knew. Brian and his team will take care of you like their own family as they guide you through the process to closure."
Jacqueline T.
"If you’re looking for company and person that will make you feel like family, look no further than Brian and his staff. Professionalism, dedication and a personal touch. You can’t ask for more."
Jonathan Q.

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