Who Should Consider a Reverse Mortgage?

Reverse mortgages are a convenient way for senior citizens to get the money they need. They allow seniors to use the equity they have in their homes to borrow money. But unlike a traditional mortgage or home equity loan, they are not required to make monthly payments until the loan is paid in full. The loan is not due until the homeowner moves, sells the house, or dies.

A reverse mortgage usually leaves the recipient’s estate owing money when he passes away. In most cases, the house must be sold to repay the loan. The remainder of the money goes to the deceased’s estate. Because of this, a reverse mortgage may not be a good idea if you are intent on leaving your home to your children or other heirs.

So who should consider a reverse mortgage? If you don’t mind leaving the debt to your estate along with the prospect of selling your home to pay it off, a reverse mortgage could be the answer to any financial needs you may have.

There are reverse mortgage programs that pay out in lump sums, monthly payments, and lines of credit, making them one of the most flexible ways for senior citizens to borrow money. The funds can be used in any way the recipient wishes. Here are some reasons to consider the different types of reverse mortgages:

• Monthly payment – A reverse mortgage in which the proceeds are paid in monthly payments provides a great way to supplement your income. If you are having trouble making ends meet, this type of reverse mortgage could be just what you need. Monthly payments are also good if you have monthly health care costs or need an item that is billed by the month, such as a cell phone.

• Lump sum – A lump sum can be a solution to a large and unexpected expense, such as a family burial. It can also help if you need or want to buy a new car or other expensive item. You could use it to consolidate debt or pay off your existing mortgage. You could even get a lump sum reverse mortgage to take that vacation you’ve been dreaming of.

• Line of credit – A reverse mortgage that pays out in a line of credit can be used for lots of things. Since you only have to pay back the money you actually get out, it can also minimize the amount of home equity you lose and the amount of debt you incur. The flexibility of a line of credit lends itself to almost anything you need to use it for. If you need help with yearly expenses such as insurance premiums or property taxes, the line of credit may be your best bet.

As you can see, the proceeds from a reverse mortgage can be used in many different ways. If you are 62 or older, have sufficient equity in your home, and have any type of financial need, a reverse mortgage is worthy of consideration.