Senior citizens who may be suffering from various forms of debt have often used a reverse mortgage as a way to find relief from their creditors. A reverse mortgage is typically seen as a beneficial way for homeowners to gain access to funds which will help them erase different debts, which can be greatly helpful to a senior citizen living on a fixed income later in life.
However, there are some financial advisers who caution against using a reverse mortgage for senior citizen debt relief. While the funds from a reverse mortgage can be used for personal expenses, there are those who feel that a reverse mortgage is too risky and should be avoided by senior homeowners.
Yet, on the other side of the argument, there are proponents of a reverse mortgage who point out that capital gained from this type of home loan can help homeowners erase various forms of debt, meet medical costs, erase their mortgage payment obligations, or simply provide access to money for other needs later in life. Also, when used properly, the homeowner does not have to repay funds or make payments on a reverse mortgage as long as they live in their home, and for this reason many homeowners choose this reverse mortgage option later in life.
While there are no required repayments, homeowners need to understand that a reverse mortgage is a type of debt which will have to be repaid eventually, but this is typically accomplished after a homeowner passes away by heirs either using money from the homeowner’s estate to repay the debt or simply selling the house.
Senior citizen homeowners who are looking for debt relief opportunities are highly advised to research how a reverse mortgage will affect their personal financial situation before proceeding. Obviously, if a homeowner has more equity in their home than they owe, a reverse mortgage can be helpful, but again, adding debt to a home that is almost paid off or is owned by the homeowner can be problematic.
However, a reverse mortgage can lessen the burden of certain dates later in life for senior homeowners, but a reverse mortgage must be repaid if a homeowner fails to pay property taxes or moves from the home. Since this type of mortgage does not get repaid and continues to draw interest, homeowners are cautioned before entering into this type of home loan even if it is to help repay various debts later in life.