Reverse Mortgages Require Serious Thought

A reverse mortgage is a sophisticated lending instrument that should be used to make ends meet as a last resort. They are not loans that should be used for a short term fix because they can be more expensive than a home equity loan or a traditional mortgage. If, after serious consideration, a reverse mortgage seems like the right choice, it can be a life saver.

Reverse Mortgage Benefits

• A reverse mortgage loan provides access for qualified borrowers to a home's equity. The equity can be distributed in several ways: a lump sum, a line of credit, a fixed monthly payment, a payment for life, or some combination of these.
• If used to pay off an existing mortgage, a reverse mortgage can end monthly mortgage payments, significantly improving the home owner's cash flow.
• A reverse mortgage can be used to consolidate debts, pay medical expenses, make repairs to the home, or whatever is necessary. Most reverse mortgage lenders allow the home owner to choose how the money is spent.
• Most reverse mortgage lenders will roll in the up front costs associated with the loan. This can mean little or no out of pocket costs.
• The loan does not affect the ownership of the home. Any equity remaining in the home after repaying the loan remains the asset of the home owners or their estate.
• The borrowers are guaranteed never to be forced to move or sell the home regardless of the value of the home or the balance of the loan. The home owner is required to use the property as a primary residence.
• There are no monthly mortgage payments. Interest due on the loan continues to accrue until the loan is repaid.
• Borrowers are never liable for more than the proceeds from the sale of the home, regardless of the property's value or the reverse mortgage balance.
• 95% of reverse mortgages are Home Equity Conversion Mortgages (HECMs) and are insured by the Federal Housing Administration (FHA).
• Professional counselors who have been trained according to US Department Of Housing And Urban Development (HUD) guidelines, work with borrowers until they are confident in their reverse mortgage decisions. Borrowers are taught about comparing reverse mortgage programs as well as alternatives to reverse mortgages.

Reverse mortgage provide extensive benefits when selected by the right people for the right reasons. HUD-approved reverse mortgage counselors can help you decide if a reverse mortgage is the best alternative for you.

Renee Morgan
Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.