Senior homeowners are having difficulty in their financial lives due to a variety of reasons and, as a result, there are indications that more homeowners are turning to reverse mortgage loans as a way to access capital from their home’s equity. FHA reverse mortgage loans have been helpful to certain homeowners, but some financial advisers are cautioning homeowners before they proceed with this type of mortgage and suggest that senior homeowners seek out other options first.
Typically, when a reverse mortgage is concerned, especially one offered by the Federal Housing Administration, a homeowner must go through a counseling session which will make them aware of any difficulties which may arise from a reverse mortgage and also point out requirements that must be met before a homeowner can successfully obtain a reverse home loan. This is beneficial in that homeowners have been able to find alternatives to a reverse mortgage which may help them find financial relief without the risk which sometimes is associated with a reverse mortgage loan.
Some senior homeowners have difficulty meeting mortgage payments, medical costs, or other expenses and, as a result, use a reverse mortgage as a way to find solutions to these problems. There have been, as an example, senior citizens who use a reverse mortgage loan to pay off the remaining balance of their mortgage obligation, thus eliminating their monthly mortgage payments.
However, a reverse mortgage often will require that, when a homeowner passes away, the home be sold in order to repay the debt, which would obviously make the passing of a home to heirs impossible, in many cases. There are, obviously, homeowners who may not suffer by having to forgo leaving their home to their children or other heirs, but this is one factor which is often pointed out to homeowners who are attempting to obtain a reverse mortgage.
Also, since one of the alternatives to a reverse mortgage is relocating to a more affordable living arrangement, which would require the sale of a home, many ask why a reverse mortgage would not simply be used if a homeowner will be unable to pass their home on any way.
Downsizing to a more affordable home can bring in money from the sale of a home, yet the difference is that a homeowner would not be indebted for the reverse mortgage as a result. Money gained from the sale of a home can be helpful for senior homeowners later in life, but a reverse mortgage could cause difficulties if a homeowner has to relocate or fails to pay their property taxes.
On the other hand, reverse mortgages have been very beneficial for certain homeowners and, in most cases, have given these individuals peace of mind when it comes to their finances. While there are drawbacks, homeowners who are considering a reverse mortgage are often advised to heavily research any implications a reverse mortgage will have on their financial situation and possible problems which may arise in the future before they proceed with this type of home loan.
Again, more seniors are turning to this option due to fallout from economic troubles which have been experienced over the past months, but financial advisers still want these individuals to be sure that a reverse mortgage will be best for their situation before they proceed.