Reverse Mortgages in these Harsh Economic Times

Monday, July 30, 2012

Reverse Mortgages in these Harsh Economic Times

The fact that these are harsh times is an indisputable fact. This harsh fact has hit seniors worse than others. In many instances, seniors are unable to work anymore, and with their retirement fund all gone - they have no source of income coming. As a result, more and more homeowners are turning to reverse mortgage lenders. These reverse mortgage lenders are able to help seniors, especially those who are having issues with their finances.

The reverse mortgage loan is the best way for seniors on a fixed income level, or with no income, to generate income, and be able to pay their bills. If you're in debt, then this loan will help you pay off those debts. You can do practically anything with a reverse mortgage loan, whether it is home improvement, or paying off your credit card debt. In many cases, senior home owners can use this debt to pay off their pre-existing home mortgage. Another term used to discuss and refer to reverse mortgages is HECM, which stands for Home Equity Conversion Mortgage.

There are certain requirements for reverse mortgages

-You have to be at least 62 years of age
-You have to remain in the house when you take the mortgage

The maximum amount you can borrow is $625,000. With the reverse mortgage loan, you aren’t able to access all of the equity in the house, just a percentage of it. There are numerous ways you can access this equity, first, you can use it as a line of credit. This is the option most seniors opt for. The second method is you can get a lump sum amount, all at once. The third most popular option is getting a set monthly payment from the lender.


The benefit of this loan is that you don't have to make payments until after you are deceased, or unless you move out of the house. After you are deceased, your estate is responsible for paying off the loans. That means your children are not responsible for your debt. In the event after you do pass away, your house is worth less than the amount of equity you borrowed, there are two options available. 

The first option is that the estate/heirs can pay the entire loan amount. If they do not, the house will be foreclosed by the lender in order to recover funds given as part of the loan. The reason why lenders opt to take this loan is because it is backed by the federal government. Even if the lender is unable to recover all of their funds from the loan, the federal government repays lender the difference.


The biggest disadvantage when it comes to reverse mortgage is that younger the borrower is, the less money they can expect to get. These loans come with interest rates that are known to be higher than traditional loans, which is another issue that borrowers sometimes face when it comes to reverse mortgage loans.

Striking advantage 

One great benefit when it comes to reverse mortgage is the fact that the funds can be used for anything. For example, if you’re deep in debt, you can get a reverse mortgage and use those funds to pay off your debt! That means you can eliminate all of your debt, which could potentially ruin your credit score, all thanks to the reverse mortgage loan!

About the Author: 

Max Soni is a regular writer for various finance related communities, including About Reverse Mortgages and Reverse Mortgage US. He primarily writes for debt consolidation companies, and lenders that give reverse mortgages to seniors.  

1 comment:

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