A reverse mortgage enables homeowners over the age of 62 to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. The reverse mortgage is named because the payment stream is “reversed.” Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you.
Senior Citizens often on fixed income often toy with the idea of both reverse mortgages and bankruptcy. Social Security is increasingly not enough for today’s senior to live on, and with many of the pensions cut back, becomes more and more an issue. To help ease the burden Senior Citizens turn to equity in their home. Here is the problem, Reverse Mortgages are not for everyone. Problems with these loans are:
- They require high fees or costs to set up.
- Reputable organizations are hard to distinguish from un-reputable ones.
- There are requirements that are very difficult to meet
- You can not leave the home to benefactors such as children.
- If you home increases in value, you are locked into the original rate.
Reverse mortgages are not all bad, they have many advantages. Seniors get to keep their home and it helps pay for living expenses.
If you are thinking about looking into a reverse mortgage it is important you inform yourself on your options. Talk to your lawyer, make sure your company is reputable,and know what you are getting into.
Here are some helpful websites: