How Do You Know if You Need a Reverse Mortgage?

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Reverse Mortgages are becoming more popular across the country. More seniors are now asking the question, "Do I require a reverse mortgage?" There are many ways to answer this question. This article will discuss several of the most common questions in discovering the usefulness of the Reverse Mortgage for different individual situations as well as some suggestions to beginning the process.

1) "I don’t have a mortgage!" Why would I get a Reverse Mortgage? "

This is one of the most common disputes that arise when discussing Reverse Mortgages. Many seniors have a financial goal to eliminate all mortgage debt. However, this method is slowly becoming obsolete with the advent of home equity programs, such as the Reverse Mortgage. The threat of foreclosure and default are two of the biggest concerns when you take out a loan to pay off a mortgage-free house. The Reverse Mortgage is one product that removes this threat. There are never any payments required for a Reverse Mortgage as long as you live in the home. You can use the equity in your home without fear of losing it, and without having to make monthly payments. Mich Sneddon, CPA, CA

2) "I don’t need anything." "

A Reverse Mortgage is commonly used to remove a current monthly mortgage payment, to help a senior out large medical or credit card debt, or to secure an investment or an insurance product. The phrase "I don’t need anything" is often used without considering all the benefits and possibilities that a reverse mortgage can offer. A reverse mortgage can be a very effective "safety net". Reverse Mortgages can create a huge, liquid, high-interest earning account that can be accessed in an emergency or when there is an opportunity. Right now, Reverse Mortgage credit accounts, which function very similar to checking accounts, earn well over 6.7%. This extremely useful when a medical crisis occurs, or a timed financial opportunity presents itself, and the senior will not have to affect any of their savings, investments, or income.

3) "Why would I give my house away? "

Many seniors believe this is a common misconception when they learn about reverse mortgages. First, a Reverse Mortgage Lender does not take your home or ownership of the home. There is no title or deed transfer. The senior retains all rights of ownership they previously enjoyed and the only change is that the Reverse Mortgage becomes a lien on the property. Seniors can sell their home at any time and they may also move. If the borrower dies, the property will pass to the heirs.

4) "I am on Medicare and Social Security. I don't want to lose those benefits. "

The largest benefit of the Reverse Mortgage is its guarantees from the Federal government. The Department of Housing and Urban Development regulates and facilitates the program. Michael Sneddon All Federal benefits, such as Medicare and social security, are not affected by the additional income generated from the Reverse Mortgage. Reverse Mortgage proceeds are not considered income, but equity.