Reverse mortgages for senior citizens can offer a variety of benefits for any homeowner later in life. Some view reverse mortgages unfavorably, but this type of loan can actually do a lot of good for a senior homeowner that is financially troubled.
A reverse mortgage, typically, is going to be more beneficial if the homeowner has either paid off their home or has more equity in their home than they owe. The reason for this is homeowners have to put any money obtained from a reverse mortgage toward their mortgage balance first, so the money from a reverse mortgage may all go toward the mortgage balance and leave the homeowner with nothing.
However, if a homeowner can get more from their reverse mortgage then they can pay off their mortgage balance, which gets rid of a monthly mortgage payment, and they have the remaining money to use however they see fit. Many people will pay bills, medical costs, or just fix up their home with the funds from a reverse mortgage.
Keep in mind though, a reverse mortgage is a form of debt and will have to be paid back eventually. The thing is, as long as a homeowner is living or residing in their home, the reverse mortgage doesn’t have to be repaid. Typically, a reverse mortgage is paid from the homeowner’s estate after they pass away, so keep these things in mind before getting a reverse mortgage and make sure it’s the right financial thing for you.