Reverse mortgages appear to be more popular today than ever and many seniors are using this option to better their lives, improve their finances and pay for medical costs. So , how common are reverse mortgages?
What Is a Reverse Mortgage?
Reverse mortgages in the past were often viewed negatively but today many see reverse mortgages differently, as a way to keep their home and help with finances. Reverse mortgage is a loan that gives homeowners 62 and older access to the equity that has been building up in their home. Once the homeowner has access to this equity, he or she can use that money in various ways such as making improvements to their home, paying medical bills or taking care of living expenses.
Facts About Reverse Mortgages
There is no repayment of the loan until the borrower sells the home or does not live in the home for more than a year. When the house is sold, the loan must be repaid, including interest. Should the borrower have to go to a nursing home and be there for more than a year, then the loan must be repaid.
The borrower can live in the home once the loan has been set up, even if a co-borrower dies.
There are no monthly payments. But, property taxes must be paid, homeowners insurance must continue and the home must be maintained. The funds that are received from the reverse mortgage have no affect on Social Security or Medicaid benefits, but benefits that come from Medicaid and Supplemental Security Income may be affected. (Check on these two areas if you find that this might be a restriction.)
A prospective borrower can still qualify, even if he or she is still paying on a conventional mortgage. The proceeds that come from the reverse mortgage will be used; however, to first pay off the existing mortgage.
There are negative aspects of a reverse mortgage and they are:
Your debt will rise
There will be fewer assets for you or your heirs
There will be higher costs when the loan begins.
So, how common are reverse Mortgages? Statistics show that reverse mortgages are quite popular and its popularity is growing. With our economy still in bad shape, it is clear that reverse mortgages may be the answer to keeping one’s home and holding on to one’s finances. But, as with any loan, be sure to check out the facts before signing up.
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