FHA reverse mortgages have been used by homeowners over the past years as a way to gain access to funds from their home’s equity later in life. This type of mortgage, which is used for a variety of reasons, is available to homeowners who are at least 62 years old and looking to gain access to cash from their home’s equity but may not want a mortgage payment that comes with traditional refinancing.
Reverse mortgages have allowed senior homeowners access to money from their home which they can use for a variety of reasons. Some homeowners have used these funds to pay medical costs, for upgrades on their home, or as a way to gain money for personal use. While there is no repayment required on these types of home loans, advisers often make it a point to be sure homeowners understand that a reverse mortgage is debt that will eventually be repaid.
New FHA reverse mortgage rules are said to be making reverse mortgages more affordable since they will eliminate some upfront fees and, in certain cases, allow homeowners more access to money. However, homeowners need to understand that a reverse mortgage continues to build over the lifetime of the homeowner, and can become quite costly in some instances.
A homeowner’s personal situation and financial needs will typically determine whether a homeowner should take the lump sum of cash from the reverse mortgage or gain access to a line of credit, but again, homeowners need to look at how a reverse mortgage will benefit them before proceeding. As long as the homeowner lives in their house and keeps their property taxes current, repayment on a reverse mortgage is usually not required.
Yet, after a homeowner passes away, the funds from a reverse mortgage are due and this money owed usually comes from the homeowners estate or from their heirs selling the home. While, again, reverse mortgages can allow senior homeowners access to money for various expenses later in life, this type of home loan is something that needs to be heavily researched before being used so that homeowners will know exactly how a reverse mortgage will affect them and their personal financial situation.