Homeowners have benefited from a reverse mortgage loan in that they have been able to access funds from their home in order to meet bills that may arise later in life. Senior homeowners often have various expenses that might not be easy to meet but some have turned to a reverse mortgage loan as a way to gain access to equity in their home which can allow them to meet these costs or lessen any financial burden they may have.
Reverse mortgages have been used in the past by homeowners to meet costs that come from expenses such as medical obligations, home repair, or some homeowners have simply used reverse mortgages for personal use like investing and as a way to eliminate their monthly mortgage payment. However, there are many who believe reverse mortgages are a bad idea and a poor decision for anyone who chooses this type of loan.
While some homeowners have been able to benefit from a reverse mortgage, like those who use a reverse mortgage to pay off the remaining balance of their home thus eliminating in monthly mortgage payment obligation, some homeowners may find themselves in a difficult position if things go awry. A reverse mortgage does not require monthly payments, which attracts many homeowners, but a reverse mortgage is a form of debt that eventually will be repaid.
Financial advisers have cautioned homeowners who are considering a reverse mortgage to weigh the pros and cons and how they will be affected if they use a reverse mortgage loan for expenses or access to capital later in life. Typically, funds for a reverse mortgage are repaid after a homeowner passes away and these can come from either the homeowners estate or from some of the proceeds that are gained when a homeowner’s heirs sells their home.
However, homeowners who may need assistance financially and decide to use a reverse mortgage must make sure they understand that some of their estate may be used to repay this debt, which would obviously leave less for the heirs. Also, in cases where a home has been paid off, financial advisors cautioned homeowners since they are essentially taking on debt against something, in this case their home, which they own outright.
While it will be dependent upon a homeowner’s situation as to how a reverse mortgage will affect them and if a reverse mortgage is in their best interest, homeowners may benefit from this access to capital and are not required to make repayments on this debt while they are living in their home and paying property taxes, but again, a reverse mortgage is not free money and certain obligations must be met by a homeowner with this type of loan.