Information you need to know before entering into a reverse mortgage so that you can make the right decision.
If you are over the age of 62, you may be considering entering into a reverse mortgage. Reverse mortgages allow you to receive a monthly sum from your lender as long as you live in your own home. However, this mortgage program is not for everyone. Before entering into a reverse mortgage, there are several factors you must consider so that you don’t create financial hardship for yourself or your heirs.
WHAT DOES A REVERSE MORTGAGE ENTAIL?
The reverse mortgage program allows people over the age of 62 who own their own homes to receive a loan payment each month. In addition to age, the homeowner must not owe a significant balance on a previous mortgage, although reverse mortgage funds may sometimes be used to pay off a small remaining balance on an existing mortgage.
WHO PAYS BACK THE LOAN?
If the senior citizen remains in the home for the rest of her life, she will never have to repay the loan. However, after his death, his heirs will be required to pay off the loan. Heirs often choose to sell the home in order to finance the obligation.
WHAT IF THE SENIOR CITIZEN MOVES?
If the senior citizen moves for any reason, the loan immediately becomes payable. The former homeowner can sell the home in order to pay back the loan.
THINGS TO CONSIDER
Reverse mortgages only benefit the senior citizen as long as she remains in the home. Seniors may move for a variety of reasons: illness interfering with the ability to take care of oneself; the death of a spouse; the birth of grandchildren elsewhere in the United States; or simply loving to experience different places of residence. Before entering into a reverse mortgage, the senior therefore has to consider the likelihood of any of these occurrences. It is also important to realize that the burden of repaying the loan will most likely fall to the senior’s heirs; their wishes, needs, and financial means must also be taken into account before making this decision.
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