Senior citizens that qualify for a reverse mortgage may be able to pay off their home loan and rid themselves of a monthly mortgage payment. A reverse mortgage is only available to senior citizens, so if money is needed later in life, a reverse mortgage is a great way to use the equity in your home to make payments, home improvements, or simply have access to cash.
A reverse mortgage must first be put toward the balance of a home loan. If you owe money on your home and get a reverse mortgage than any or all of the reverse mortgage funds must go toward paying off the mortgage balance.
Obviously, if you have no mortgage balance you keep the money, but using the money to pay off your home loan is a great way to alleviate the financial strain associated with a mortgage payment. If the money you get from a reverse mortgage is less than what you owe on the home, you can still use your own funds to pay off your mortgage, but in such a case as that, you’ll have to look closely at your personal financial situation to see if a reverse mortgage is right for you.
If you have more equity in your home and can get enough from a reverse mortgage to pay off your home loan, then it could benefit you financially. A reverse mortgage never has to be paid back as long as the borrower is alive or remains in the home, but keep in mind it is debt that must be paid back, most commonly from the homeowners estate after their passing.
Again, if you are interested in a reverse mortgage, you will want to look at your personal financial situation, make sure you understand what a reverse mortgage requires, then decide if it is the right choice for you.