Tips to help senior citizens understand what reverse mortgages are and if it is in their best interest to apply for them.
Lately, senior citizens have been encouraged to apply for reverse mortgages. The reverse mortgage program allows seniors to be paid a monthly sum if they continue to own their own home. This money is a loan, but it does not need to be repaid until the senior citizen moves out of the home or dies.
WHY GET A REVERSE MORTGAGE?
Many seniors are living on a fixed income. Social Security benefits are minimal, and seniors need extra income to maintain their lifestyle. The reverse mortgage can therefore be very tempting, especially if the senior is in good health and plans to live in the home for many years to come.
DRAWBACKS TO THE REVERSE MORTGAGE
The main problem with the reverse mortgage is that it must be paid back eventually. If the senior citizen moves out of her home for any reason, the loan becomes due. This is problematic because even the senior in best health doesn’t know what the future may hold; if he has to move to an assisted living facility in ten years, the loan payments may be substantially more than he or his family had planned to handle. Seniors may also want to move for happier reasons, such as the birth of a grandchild in another state. A senior who has a reverse mortgage is tied to the property until death unless she has the money for monthly loan payments.
FACTORS TO CONSIDER
Obviously, the senior citizen must consider the possibility of moving during the remainder of her life. Since this is to some extent unknowable, he must also consider whether he or his family can handle mortgage payments in the event that he cannot continue to live at home. The senior should also consider what she wants to happen to her home after death. Often, heirs must sell the home in order to pay off the reverse mortgage. If the senior wants to leave his home to children or grandchildren, the reverse mortgage is not an option.
THE ULTIMATE QUESTION
Before entering into a reverse mortgage, the senior must decide whether the money she would receive is worth the price that must be eventually paid back. It is important to make this decision in conjunction with children, grandchildren, or anyone else who may be involved in the senior’s finances or care at the end of his life.
Related posts:
- If I Get a Reverse Mortgage, What Happens to My Home When I Die?
- Who Funds Reverse Mortgages?
- Does My Family Need To Leave If I Have A Reverse Mortgage?
- Does The Money From A Reverse Mortgage Affect Medicare, Social Security, or Pension Benefits?
- When is The Reverse Mortgage Due and When Is It Payable?