Critics of reverse mortgages continue to issue warnings that these loans are likely to be at the center of the next financial crisis. But elderly homeowners have flocked to these loans in larger numbers as they have struggled to make ends meet during this recession. For people considering borrowing with a reverse mortgage, here are some of the things to understand about what these loans can and can’t do.

What Reverse Mortgages Can Do

1. Reverse mortgages can convert home equity into cash. This can give senior citizens another source of income to pay medical bills, fix up their homes, or retire debts.
2. Reverse home loans can allow you to avoid foreclosure and stay in your home.
3. These loans can allow you to reduce your living expenses if you previously made monthly payments on a mortgage.
4. Reverse mortgages can cut into the amount of inheritance left for your kids.

What Reverse Mortgages Can’t Do

1. These loans can’t get you out of paying home owner’s insurance and property taxes. If you stop paying on these items, the reverse mortgage lender could call in your loan.
2. Reverse home loans can’t be obtained by people under 62 years old.
3. A reverse mortgage can’t fix any problems you have with overspending. If you have trouble managing your money and carry a lot of debt, consider talking with a credit counselor.

A reverse mortgage counselor can provide more information about these loans, such as what kind of fees are involved, and how the money is paid out. You can also get free reverse mortgage loan quotes from reputable lenders. No one should sign up for a reverse loan without gathering as much information as possible. Learn more about reverse mortgage myths and facts.

This entry was posted on Monday, October 26th, 2009 at 7:32 pm 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.