Many senior citizen homeowners might be able to qualify for a reverse mortgage loan, which can be beneficial later in life for anyone who needs money and has either paid off their home or has more equity in their home than what they owe. There are many mixed feelings and opinions about a reverse mortgage, but anyone who will weigh the pros and cons and see how they fit into their personal situation should be able to make the best decision on whether a reverse mortgage is in their favor.
A reverse mortgage is essentially a loan that uses a homeowner’s equity for either a one-time payment or monthly payments. Homeowners who need money later in life for various expenses often use a reverse mortgage so that they can meet certain financial obligations. Anyone who owes money on their home, if they get a reverse mortgage, must first put that money towards paying off the balance on their mortgage.
What many people dislike about reverse mortgages is the fact that a homeowner may already have their home paid off or they are close to doing so and they essentially acquire more debt from a reverse mortgage. The reverse mortgage is debt, but a homeowner does not have to repay that debt as long as they live in their home and pay their property taxes. Usually money from a reverse mortgage is taken from the estate of the homeowner after they pass away.
However, a reverse mortgage should not be thought of as free money since the homeowner is essentially attaching debt to their home that they do not pay down but rather debt that continues to increase.
Any homeowner considering a reverse mortgage loan must look at their personal financial situation and what they want done with their estate after they pass away. Provided a homeowner will stay in their home for the remainder of their life, a reverse mortgage loan can be beneficial, but a homeowner will want to consider what might become of their home or assets after they pass away and a reverse mortgage has to be paid.