Reverse Mortgages

Reverse mortgage is a term referring to a type of loan offered to seniors with equity in their home. Reverse mortgages for seniors makes the amount of home equity available in a lump sum or in monthly payments. This loan doesn’t have to be repaid until the homeowner dies, the home is sold or the senior homeowner moves onto some type of senior living facility.

Requirements

To qualify for a reverse mortgage for seniors an individual must be at least 62 years old, own their home outright or have a small amount owed on the mortgage, and the home must be their principal residence. It is important that applicants understand the ins and outs of a reverse mortgage and are not being taken advantage of by family members or predatory lenders.

The amount of the loan is determined by different factors like the appraised value of the home, the age of the loan applicant and whether the loan will be taken in one payment or several payments. The older the loan applicant is fewer requirements are necessary and more money is available.

Pros

With limited incomes, senior finances can be stretched very lean. Reverse mortgages allow seniors to use the value of their homes to pay off other debts, attend to medical needs or even enjoy travel. The ownership of the home remains with the senior and this can be a great source of comfort and pride for seniors and their families. Being able to have the necessary cash to care for themselves can be a big relief for family members and can ensure that seniors have more choices about their future.

Cons

Reverse mortgages for seniors do have some drawbacks. A reverse mortgage is what is known as a rising loan. Because the loan is not being paid back monthly, the amount of the loan continues to rise. Also, the fees and costs of paying off the mortgage as part of the loan can make it more expensive than other types of loans. Complicated payment and repayment schedules can make it difficult for some seniors to understand the parameters of the loan.