Reverse mortgage information 

If you are younger than 60 years of age you may not have heard about a reverse mortgage but if you are over this age you probably receive something in the mail every week claiming that having one will change your life.  However, there are also horror stories about how many elderly people are being ‘ripped off' by unscrupulous mortgage lenders which just helps to confuse people so they do not know whether to pursue them or not. 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.

Probably the biggest reason for their new found popularity is the number of ‘baby boomers' that will be coming up to retirement from 2008 onwards. So during the next few years vast numbers of people will be retiring in America and most of those will only have their home as a possible source of income.

With the problems that have occurred in recent years with pension schemes and investments, many elderly people will rely on their home to provide an income to which they have become accustomed. The great benefit of a reverse mortgage is it pays out a monthly income but no repayments are made which means the debt just increases whereas with a traditional repayment mortgage, payments are made to lower the amount owed.

People using reverse mortgages repay the amount borrowed in full at a later stage and because they are no longer working, there isn't a check carried out on income or their credit history; the only exception to allowing this type of mortgage is where the person has defaulted on a federal obligation. What this means is that people who have been close to bankruptcy or foreclosure have been saved as their credit score and income are not relevant.

Another huge benefit to reverse mortgages arranged by the government is that the children of the borrowers will not be left with a debt as the lenders can never be owed more than the value of the property irrespective of how much money has been lent or if the value of the home decreases. If you are planning on moving or have no intention of using the money lent to you then a reverse mortgage is not the best plan and in these circumstances it will be more expensive.

This is not a course of action where the advice is given by someone who only helps with reverse mortgages when they have nothing else to do so seek the assistance of a professional. Unlike forward mortgages, fees and rates are regulated by HUD so everyone is on an even playing field, and many mortgage companies often have many more programs available and are not limited only to just the few products that just one bank has to offer.

This subject should be discussed with any children involved as it will affect their inheritance but seniors should not worry unduly about their reaction. 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.