Reverse Mortgage Home Loans–Is An FHA HECM Reverse Mortgage A Better Option For Senior Homeowners

Many senior homeowners have turned to reverse mortgages as of late so that they can gain access to capital or credit from their home’s equity. Obviously, this can be greatly beneficial for a homeowner who may be living on a fixed income later in life but may have expenses for a variety of reasons, like medical costs, or some senior homeowners have tapped their equity through a reverse mortgage in order to meet costs for home repair or investing.

While the uses for capital which comes from a reverse mortgage will vary, there are some concerns as to whether homeowners should use a reverse home loan at all, and if so, are there different reverse mortgage options which may be available. There are numerous lenders which may offer a homeowner the opportunity to take advantage of a reverse mortgage if they meet certain qualifications, but a new FHA reverse mortgage known as the Home Equity Conversion Mortgage, is seen by some to be a more beneficial reverse mortgage option.

Again, ideas on the benefits of a reverse mortgage often vary from one financial adviser to another, but many see the FHA reverse mortgage as a safer reverse mortgage option since this reverse mortgage may be a smaller home loan than a traditional reverse mortgage. However, just because a homeowner may acquire a smaller reverse mortgage amount, does not always mean that a reverse mortgage option is in their best interest.

Many argue against reverse mortgages simply because they feel it’s essentially surrendering a home. Typically, homeowners who meet requirements of a reverse mortgage will not have to repay any of the debt on the reverse mortgage, meaning there are no monthly mortgage payments, but a reverse mortgage is debt that must eventually be recouped by the lender and this is typically done after homeowner passes away. Usually, funds from a homeowner’s estate or the sale of the property will repay the reverse mortgage obligation, which for some, could be quite costly.

Yet, as difficult financial times persist for many, more senior homeowners feel that tapping into their equity through a reverse mortgage is one of their best options, since they many have few opportunities for employment or other forms of income. However, one advantage which may come with some reverse mortgages, including the FHA’s reverse mortgage, is that there are lenders who require a homeowner to participate in a session with an approved housing counselor to discuss the implications of the reverse mortgage and alternative options a homeowner may use if monetary constraints is their main concern.

It’s true that there have been homeowners who have benefited from a reverse mortgage over the past months, but before rushing into this type of home loan, homeowners are often advised to analyze their situation and make sure that if a reverse mortgage will be helpful for their predicament, they understand all that this type of mortgage will entail.