Reverse Mortgages, A Problem or a Blessing?

About the author:

Randy Taylor was first licensed as a registered representive, and  insurance  agent  in  1983. He was first published in 1998. He has also spoken to financial advisor groups since 1995. California insurance Lic. # 0643596
Author: Randy Taylor Copyright 1/17/2014 , All rights reserved.

What is a Reverse Mortgage?

A reverse mortgage is a loan vehicle that unlocks or makes available part of the equity in a home to provide
seniors with cash flow to supplement their retirement.
Like any other financial decision you would need to consult with an  attorney, tax person, or financial consultant before making  any decisions.

How do they work?  When you qualify, the equity you have built up can be paid to you and then used for any purpose while the home owner gets to continue living in the home without the need  to make their monthly mortgage payments.

What are some of the Advantages?

The borrowers do not  have to repay  the loan until the borrower no longer uses the home as a primary residence; or until they do  not meet the obligations of the loan.

The loan can be used  to purchase a primary residence if you are financially able to pay the difference between  the loan and the home purchase price,closing costs etc.
  
The borrower does not have to qualify for the new loan based on income guidelines.

Unlike a line of credit; you do not have to make payments..Instead  the loan pays you.

You still own  the home and must live in it.

What are some of the requirements?

The key issue is you have to own  the home outright  or have a high  equity position.

You must be 62 years old or older

You are still liable for taxes and insurance on your own.

Are there downsides?

Of course there are.. The most obvious is that you are getting  a loan and there will  be costs involved.

Your remaining estate that would be passed on to your heirs will be reduced as you spend the equity.

 You should contact HUD at  1-(800) 569-4287 and also your financial consultants before making any decisions. A counselor will also help when  you apply with required  training. This article is meant to be offered for informational purposes only and not to be  interpreted as financial  advice of any kind.