Reverse Mortgage Home Loans For Seniors–How A Reverse Mortgage May Impact The Personal Finances Of A Homeowner

Here in September many senior homeowners are looking into a reverse mortgage, which is nothing new as this potential source of income or line of credit for senior citizens has been heavily advertised over the past months, as there are some benefits seniors may gain from using a reverse mortgage, but when it comes to how a reverse mortgage may impact the personal life of a homeowner, there are also drawbacks that officials are urging senior citizens to be aware of, simply because reverse mortgage home loans are not for everyone. Also, there are some changes that have been made in the past months in the reverse mortgage industry, which could impact a homeowner’s decision as to whether this type of option to access their home’s equity is going to be best for a homeowner’s particular needs.

While there have been some major banks who have exited the reverse mortgage business, there are options available through the Home Equity Conversion Mortgage initiative, which offers a reverse mortgage that is federally insured and has given some security to lenders when it comes to making these agreements available to current homeowners. Yet, access to a reverse mortgage has not necessarily been a huge problem for homeowners, but whether homeowners are going to benefit from a reverse mortgage and are aware of all that a reverse mortgage entails has been one of the main issues.

Homeowners will have to undergo reverse mortgage counseling, which has been helpful when it comes to allowing homeowners to fully understand what a reverse mortgage means, simply because there are some advertisements that make reverse mortgages sound like they are free money to a homeowner. While homeowners who do participate in reverse mortgages don’t have to make a payment while they remain in their home, there are certain costs and fees that will arise, interest that is constantly building, and if homeowners do not meet certain qualifications or requirements, like remaining in their home, paying property taxes, and do not provide upkeep on the home, this could lead to a situation where a homeowner will have to begin to repay this debt.

In the end, the reverse mortgage debt is usually repaid after a homeowner passes away and the property is sold, but a homeowner’s heirs may have the option of refinancing the mortgage or purchasing a home.  However, it should be known that this debt is usually repaid from the estate of the homeowner. Obviously, the situation becomes more complicated if a homeowner is unable to claim their home as their principal residence, which may be the case if health conditions arise, as an example, and a homeowner must relocate to an assisted living facility, but this is simply one of many aspects of a reverse mortgage that homeowners must explore.

While a reverse mortgage may come at either a fixed or adjustable rate, and can potentially pay out in one lump sum or offer a homeowner a line of credit, it needs to be remembered that a reverse mortgage is debt and there are potential fees and additional costs that could increase this overall amount of debt that is due, but despite the fact that homeowners will ideally not have to make payments on this reverse mortgage, there are some factors which may arise that could make this type of loan less beneficial for some.