Reverse Mortgage

For people over the age of 60, one of the latest methods of releasing money from their property is the use of reverse mortgages which can dramatically change the life of someone who no longer has a regular income. Then there are the articles warning that reverse mortgages may be the new mortgage rip off so it is difficult to know what the truth about this financing vehicle is and whether it is a God-send for seniors, or something for which older homeowners need to be wary. Depending on your personal situation, reverse mortgages can be good and bad and despite the recent popularity for them, they have actually been available for over four decades.

The sudden stir has been caused by the baby boomer population that is about to start retiring, as of January 1, 2008. BTW, I found a site about homes in Spanish:pisos en Valencia. What this means is that America will have an unprecedented number of people retiring with many having their main asset being their homes and gone are the days when the American worker retired at the age of 62, with a pension and social security, then passing by age 70.

Now people in the Western world are living much longer but that does not necessarily mean they are enjoying the fruits of their retirement especially if there has been little or no provision for this. Reverse mortgages provide an income from the equity in the property and as no repayments are made this amount continues to increase with the addition of interest and any other charges but with a traditional mortgage, repayments are made which gradually reduce the debt.

As income is not an issue, the amount owed is paid back in full at a later date and provided the borrower has not failed to pay a federal debt, they will not be refused. No credit score or income information is required either so this type of arrangement has saved many people from financial distress.

Loans that are arranged via the federal government are provided on the understanding that the debt can never be more than the value of the property irrespective of how much is owed. In some instances where the loan remains unused, a reverse mortgage can be costly but for the vast majority of borrowers it is the best way for them to have a familiar roof over their head for as long as they need it.

This is a major decision for most people and requires the help of a professional financial expert in reverse mortgages who can supply all the information necessary. The most obvious benefit of reverse mortgage schemes is the fact that interest rates and fees are regulated by HUD and so everyone is treated the same although the chances of different types of plans are greater with a mortgage company than they are with a traditional bank.

If you have family it is a good idea to speak to them regarding this as you will be spending their inheritance but on most occasions it is the person requesting the reverse mortgage that has these concerns. In reality the children cannot afford for the parents to live with them and would prefer they were not in a residential home so are not concerned about the financial implications to themselves.

Theo Lamban

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Theo Lamban

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