There was a consultation that cleared up misunderstandings about reverse mortgages. Some believed it was a loan that transfers ownership of the house to the bank. In reality, that is not the case. Ownership remains intact. Here's a summary of the conversation held in Roland Heights.

The first misconception is that the bank takes the house. In fact, ownership is maintained, and the loan principal and interest are settled when the house is sold, the owner passes away, or it is no longer used as the primary residence. It is a structure where homeowners aged 62 and older can receive funds from a lending institution in the form of a lump sum, monthly payments, or a line of credit, using their home equity as collateral.

The second misconception is that the amount of money available is unlimited. In reality, the loan limit is determined by age, home value, and interest rates. According to Zillow, the average home value in Roland Heights in 2026 is projected to be $946,276, an increase of 8.7% from the previous year. The higher the home value, the more funds can be accessed, but it is not unlimited.

The HECM, which is insured by the Federal Housing Administration, is the only type guaranteed by the government. It is a non-recourse structure, meaning that if the home value falls below the loan balance, heirs are not required to pay the difference. The absence of monthly repayment obligations is also an advantage.

The fifth misconception is that there is only one way to receive funds. In fact, you can choose from a lump sum, monthly payments, or a line of credit. The line of credit increases as you do not use it. It is also possible to combine options based on your situation.

The third misconception is that there are almost no costs involved. In reality, it is quite the opposite. When you add the origination fee, the initial mortgage insurance premium in the 2% range, and closing costs, the initial costs are higher than those of a traditional mortgage. Over time, the equity decreases, and the assets left for heirs also diminish.

The seventh misconception is that the assessment is merely a formality. In fact, a financial capability assessment is conducted, reviewing credit history, income, and expenses. If there are any tax delinquencies, a portion of the loan amount is set aside for property taxes and insurance. It is not a formality.

The eighth misconception is that you cannot cancel at any time. In reality, you have the right to cancel without any specific reason within a certain period after signing the contract. The exact period and procedure should be confirmed in the contract and consultation process.

The ninth misconception is that everyone receives the same amount. In fact, the amount varies based on age, home value, and interest rates. The older you are and the higher the home value, the more favorable the structure.

The fourth misconception is that you do not have to pay property taxes. In reality, you must continue to pay property taxes and insurance, and failure to do so can lead to default risk. The average effective property tax rate in California is about 0.71%, but this figure includes existing owners who are locked in at lower rates due to Prop 13. Recently purchased homes or those pending reassessment typically face rates between 1.1% and 1.3%.

People aged 65 and older make up 16.5% of California's population. It is particularly important for this demographic to clearly distinguish between misconceptions and facts.

The sixth misconception is that heirs have no options. In reality, they do. Heirs can choose to sell the house to settle the loan, pay off the balance and keep the house, or transfer the house to the lending institution. Given the many misconceptions, it is essential to be cautious of unfamiliar offers or rushed proposals.

The tenth misconception is that consultations are merely a formal signing procedure. In fact, you can choose from in-person, phone, or online consultations, and a certificate obtained after completing the consultation is required to start the loan application. It is a practical process that covers costs, alternatives, and family situations.

As we clarify each misconception, what remains is simply the truth. One should calmly assess whether they meet the conditions and can afford the costs.

Before applying for an HECM, you must undergo mandatory counseling with a HUD-approved counseling agency. To judge without misunderstandings, this counseling and discussions with family are the most reliable methods.