All In Reverse

               A reverse mortgage is a financial tool for senior homeowners who want to access the equity in their homes without having to take-out a home equity loan. The significance of the reverse mortgage as opposed to a normal home equity loan is that it is paid back only when the home is sold, the last burrower dies, the owners fails to keep the taxes and insurance current, or moves out of the house for more than 12 consecutive months.  For some senior homeowners whom may have never heard of a reverse mortgages, also called Home Equity Conversion Mortgage (HECM), the process may seem like a scam.  The very idea of receiving a monthly annuity, a line of credit, or a lump sum from the equity already accumulated in their homes without adding an additional monthly expenses seems too good to be true. In most cases, when something is too good to be true, it usually is.  However that's not the case with reverse mortgages.  Reverse mortgages are a great option for seniors at least 62 years old to take control of their financial lives; who intend to stay in their homes and may not have income or savings to cover their monthly expenses.  For homeowners considering a reverse mortgage, for most, the pros far outweigh the cons.

               

                 The equity payment received from a reverse mortgage can be used to pay off an existing mortgage and whatever remains is available for the homeowner.  The homeowner would not be required to repay the funds received until the home is sold.  This is not the case with a normal home equity loan, the funds received during a normal home equity loans starts to be pay back almost immediately.  This creates an additional monthly payment which could also create a financial hardship to homeowners living on a fixed budget.  This hardship could also lead to foreclosure. With a reverse mortgage foreclosure does not come in the picture, however, the home could be loss when the last burrowers dies and the estate doesn't have the money available to repay the mortgage. This procedure is explained during counseling that the homeowners must receive prior to entering into a contract with a lender.

                Reverse mortgage counseling is a mandatory part of the reverse mortgage application process. The United States Department of Housing and Urban Development certifies housing counselors to provide homeowners with practical information about reverse mortgages.  This informs them of all the benefits, as well as, the downside to reverse mortgages.

                The main benefits to a reverse mortgage is that an individual can eliminate an existing mortgage putting that money back in his or her pockets in addition to the monthly annuity they will now receive. Individuals can also establish a line of credit to eliminate medical bills and complete home improvement projects that will add value to their homes.  Individuals can also receive a large lump sum that can be safely invested in a low risk mutual fund for growth.

                The downside of a reverse mortgage is it has high upfront fees and interest rates. This sounds scary to some but careful management of funds received make the impact of these downsides minimum.

               
                 Reverse mortgages are not for everyone but does provide stability for those who meet the requirements and need the additional assistance. Contrary to what some may believe reverse mortgages are not a scam. It's an actual mortgage program regulated by the government.  The uses of reverse mortgages have the potential to provide financial support to many senior homeowners.  The key is finding a reputable lender that is look to earn honest business without taking advantage of anyone.

Guide to Reverse Mortgages
US Department of Housing and Urban Development(HUD) Reverse Mortgage