Should I Get A Reverse Mortgage?

Although seniors have heard about the reverse mortgage, not many fully understand how it works. The programs remain shrouded in mystery, but that veil is about to be lifted.

A reverse mortgage is available to seniors who have equity in their home. The proceeds from the mortgage can be paid in one lump sum or payments can be made to the homeowner in installments. This will all be based on how much equity the owner has in the home.

As it is with most forms of refinance, the old mortgage is retired and replaced by the reverse mortgage. However, with a reverse mortgage the homeowner will not have monthly payments. With a reverse mortgage, the lender is paid off when the homeowner expires or moves out of the domicile (i.e., to live with family, friends, or into a retirement or aging community).

To meet the requirements for a reverse mortgage, the borrower must be at least sixty-two years old. There are no income requirements or restrictions that would effect eligibility. Nor is there a need to worry about credit checks, they are of no concern when it comes to a reverse mortgage.

When applying for a reverse mortgage, the borrower will be required to complete at least one counseling session with a counselor that is HUD-approved. This is to make sure that the borrower completely and fully understands what the financial and legal obligations are regarding the reverse mortgage.

In that there are so many benefits that a person can gain from taking on a reverse mortgage, it is interesting to think that some people hold reservations concerning reverse mortgages. The general complaint from people is that the home may not be around for the family of the borrower to have after he or she expires.

If the owners no longer reside in the home, the homeowner's estate can initiate a refinance of the property, converting the loan into a traditional mortgage loan. This will allow the family members to retain the home.

If the owner is concerned about leaving the financial wherewithal to ensure that the home remains in the family, they might consider increasing their life insurance policy. With the additional funds from the policy, the beneficiaries may be able to payoff the outstanding mortgage loan and keep the home.

With the help of a reverse mortgage, homeowners will be able to do things for and with their family with less stress and fewer financial concerns. On balance, many people find that the reverse mortgage is the way for them to secure their desired level of comfort. They get the money they need and are able to finally relax and truly enjoy their well-deserved retirement years.

By: Rik Lamont

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