Senior homeowners are using reverse mortgages more so at the present time due to various financial troubles that are being experienced by individuals who may have little income to meet certain costs that arise later in life. Reverse mortgages are often seen as beneficial for certain senior homeowners as they can provide cash or a line of credit for a homeowner from the equity they have built in their home.
Popular reverse mortgage offers like the FHA’s Home Equity Conversion Mortgage (HECM) or other traditional reverse mortgage opportunities have been used by senior homeowners for numerous purposes that range from meeting medical expenses, upkeep on a home, investing, or as a way to alleviate themselves of a monthly mortgage payment obligation.
However, homeowners are strongly cautioned before they enter into a reverse mortgage agreement as this type of home loan, which is not required to be repaid, is a form of debt that will eventually be settled. Typically, if a homeowner meets all the requirements of a reverse mortgage they will not have to make a repayment on their reverse home loan as long as they live in their house. Usually, a homeowner’s heirs will sell the home after a homeowner passes away or use funding from homeowner’s estate to repay this reverse mortgage obligation.
Yet, reverse mortgage counseling is becoming more routine for many reverse mortgage lenders, and is a requirement for certain programs like the FHA’s HECM program. Homeowners who are considering a reverse mortgage and have to go through these types of counseling are often made aware of what a reverse mortgage entails and how they may be effected if they must begin repaying this type of home loan.
Obviously, homeowners who may seek a reverse mortgage as a way to use equity to repay the remaining balance on their home loan might benefit from simply selling the home and moving to a more affordable location. It’s understandable that each homeowner’s financial situation may differ, but advisers who are against reverse mortgages often point out that if a homeowner is unable to claim their home as a principal residence, pay property taxes and insurance, or maintain the condition of their home, they may be required to repay this reverse mortgage debt.
It’s for this reason that many homeowners are often prompted to contact a reverse mortgage counselor to review their situation before proceeding with a reverse mortgage on their home. Again, there have been numerous homeowners who have benefited from this type of opportunity, but not every homeowner may be able to take advantage of a reverse mortgage and avoid repaying the debt down the road.