Reverse Mortgage Guide

For many Americans, making that mortgage payment each month has become increasingly difficult. Whether due to a payment adjustment on a variable rate mortgage or other factors, mortgage delinquencies are on the rise. It’s no different for our senior homeowners. However, our seniors do have one weapon in their arsenal that’s not available to younger folks — the reverse mortgage.

When a reverse mortgage is taken, outstanding liens on the property must be paid off. Such liens can include a first or second mortgage, a home equity line of credit, etc.

For many seniors, just getting rid of that payment permanently (remember, there are no monthly payments made on a reverse mortgage) makes all the difference in their lives. In fact, nearly 50% of my clients today are paying off an existing mortgage when they take out a reverse mortgage.

Seniors who pay off existing mortgages no longer have to write a check to the lender each month, that money actually stays in their pocket. Consider this…how could mom or dad’s life be changed by no linger having to write that check each month for $500, $600? What could they do differently? Pay other bills, afford the medicines they need, perhaps even splurge on a few luxuries? A trip to see the grandchildren now and then….

A reverse mortgage is a financial tool that can help selected seniors. Paying off an existing mortgage is one potential benefit, and there are others.

As with any financial decision, it’s crucial to have all the facts and make the decision based on your particular situation. Look both at benefits and costs. Ask hard questions and require specific answers. Be sure to work only with an experienced reverse mortgage consultant who puts client interests first. There are many dedicated reverse mortgage consultants out there who will provide the needed information and help the family decide the best path.

Also, get independent advice from an attorney who specializes in elder law because retirement issues involve an array of tax, estate and financial planning concerns.

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Contributor Sue Haviland, based in Baltimore, MD has been a reverse mortgage specialist for more than five years.

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This entry was posted on Monday, February 11th, 2008 at 2:00 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.