Senior citizens looking for a reverse mortgage loan may benefit from this unique type of home loan and be able to reap benefits from the potential money that a reverse mortgage can bring. However, before proceeding, homeowners should know the pros and cons of a reverse mortgage and what it entails.
Simply put, a reverse mortgage is given based on a homeowner’s equity and the funds are used first for any amount due on a home, then the rest is at the homeowner’s discretion to use. If a homeowner doesn’t owe anything on a home, they get all the money from the reverse mortgage, or if they owe some or more than would be available in a reverse mortgage, it can help to pay all or some of the remaining mortgage balance on their home. Some seniors take out a reverse mortgage to simply be rid of a mortgage payment.
While a reverse mortgage doesn’t have to be paid back as long as the homeowners are living in the home, keep in mind that a reverse mortgage is a form of debt. Typically, what is owed on a reverse mortgage is taken out from the homeowner’s estate when they are deceased, so the question often arises, “Do I want to risk leaving less to my children or heirs?”
This is where a homeowner must decide what to do when it comes to a reverse mortgage. If a homeowner no longer lives in the home or stops paying their property taxes they will have to begin paying back the reverse mortgage, but in most cases it’s the fact the a homeowner will pass away leaving debt that troubles those considering a reverse mortgage.
Again, if one’s children or heirs don’t need the home or all the funds from a home, then a reverse mortgage may be a good option, but any homeowner considering a reverse mortgage needs to weigh the benefits and downsides to a reverse mortgage and how they will apply to them personally before making a decision.