Reverse Mortgage Loans For Homeowners Needing Funds From Home Equity–Are Reverse Mortgages Safe?

Senior citizen homeowners have been using reverse mortgages as a way to gain access to capital later in life for a variety of expenses and monetary needs. Senior homeowners, who qualify, may be able to use their home’s equity as a way to pay for certain costs that arise, like medical expenses, home repairs, or even for personal and recreational use.

Many homeowners who own their home often choose a reverse mortgage as a way to meet these costs or deal with various debt. For instance, a reverse mortgage does not have to be repaid as long as a homeowner lives in their home and pays their property taxes, so homeowners who are financially troubled can access capital from their home to pay down the debts. While it needs to be understood that a reverse mortgage is a form of debt that will have to be repaid eventually, many homeowners who properly use a reverse mortgage do not have to make the repayments and, after they pass away, funds for this type of loan can be repaid from the homeowner’s estate.

Reverse mortgages can cause a homeowner to have less to leave to their heirs, but there are certain individuals whose heirs or family do not, for instance, need their home and, as a result, homeowners use a reverse mortgage as a way to meet expenses or access capital without the worry of what they will leave after they pass away. Typically, a homeowner’s heirs can sell their home and repay reverse mortgage funds and still have money left over.

There are financial advisers who are against a reverse mortgage loan since it doesn’t get repaid and can acquire interest over time, but there are reverse mortgage servicers who point to the fact that a homeowner’s estate is rarely wiped out by a reverse mortgage, seeing as how heirs can sell the home of a homeowner who obtained a reverse mortgage and easily repay the reverse mortgage.

A reverse mortgage can be risky but also it can be beneficial, so homeowners have taken great efforts to weigh all the pros and cons and how this mortgage can affect them. However, reverse mortgages have been used beneficially by some homeowners who may still have a home loan payment but not an income that affords them the ability to meet all of their expenses. As an example, homeowners who have more equity in their home than they owe on their home loans have used funds from a reverse mortgage to pay off the remaining balance on their mortgage, which erases their monthly mortgage payment.

Again, a reverse mortgage is a debt that will have to be repaid if a homeowner moves, stops paying property taxes, or after they pass away, but it can be a way to access funds for senior homeowners later in life who may need financial assistance. Advisers often counsel homeowners considering a reverse mortgage to look closely at how this type of mortgage will affect their personal financial situation, make sure that it will be in their best financial interest, and be sure they are willing to accept any consequences that may arise before proceeding with a reverse mortgage loan.