7 Top Reasons to Consider a Reverse Mortgage

Unsure about the idea of a reverse mortgage? Not certain if you ought to encourage your retired family member to pursue a reverse mortgage? Afraid you may lose your inheritance as the heir? Doubtful that borrowing against your "nest egg" could prove useful? Discover the top reasons reverse mortgages are obtained and learn about what to consider before making the decision to get one.

1. For normal home repair and maintenance
During retirement, income is usually less than when the Senior was working. Hence, normal home repair & maintenance which was once manageable before retirement, may be an excessive expense to a Senior's limited income after retirement. A Senior may choose to utilize their option of taking on a Reverse Mortgage to cover the rising costs of home maintenance.

2. Modifying home to accommodate physical limitations
As retirees become older, physical impairments and limitations may develop in the Senior homeowner. The Reverse Mortgage can provide the funds needed to modify their home to accommodate their physical changes (i.e. shower modifications, main floor bedrooms, larger doorways for wheelchairs, etc.)

3. Paying off other bills that are behind
Again, retirees decreased income makes it difficult to adjust to keeping up with regular finances. If the Senior is like most retirees, then they may not have been able to create the savings or investments to supplement their retirement/social security income. Obtaining a Reverse Mortgage can help them keep their financial obligations without having to tap into their savings or overburdening their families and children.

4. Obtaining additional income needed to retire
With a Reverse Mortgage, a Senior homeowner can choose to receive their Reverse Mortgage in the form of an equity line. This gives the Senior homeowner the ability to withdraw funds by simply drawing out a check as it is needed.

5. Financing in home care
Seniors with less than optimum health can continue to reside in their home while being able to finance home care through a Reverse Mortgage. This gives Seniors the autonomy to continue to be able to care for themselves without the worry of having to trouble their families who may not have the money to provide the Senior's desired in home care needs.

6. Paying off a regular mortgage loan that they can no longer afford
Reverse Mortgage payments are deferred until after the death of the borrower, or when the borrower leaves the home, or when the homeowner decides to sell the home; therefore, the homeowner is no longer billed or has to make a payment in their lifetime so long as they live on the property.

7. To take advantage of their home's equity while they can.
Retirees may have already accepted their own destinies and want to take advantage of their home's equity while they are still able to travel, able to share their wealth with their families, or have the opportunity to make investments.

Another item to remember is that with a reverse mortgage, the borrower must continue to live on the property; otherwise, the mortgage is made due & payable. This proposes a challenge especially for borrowers whose physical condition deteriorates and requires them to leave their home to live in a nursing home. A borrower may be able to avoid the due & payable clause if they are able to use the funds to pay for care at home. Most retirees tend to prefer to be in their own home, rather reside in a nursing home if they could.

Another noteworthy tidbit is that the funds received from the reverse mortgage may affect the borrower's ability to receive government assistance. If the funds are kept in a savings or checking account, the government may consider the money as liquid assets and deny the retiree from receiving public benefits. With an equity line, small amounts can be withdrawn as needed and large lump sums in bank accounts can be avoided.

Most families who want to see their loved ones remain self-sufficient can understand why a Reverse Mortgage would be considered by them; their home is their nest egg and they should be able to access their equity to their advantage as they see fit.

In regards to inheritance, the borrower is in ultimate control as to how they want to distribute their assets. Because each Senior must undergo counseling before they are allowed to even have a Reverse Mortgage, the final decision to access their equity now while they are alive or leave it up to their heirs to decide at the home sale after their death is made by the Senior.

Another fact about the reverse mortgage is that the home is still owned by the beneficiaries designated by the Senior. Just like a regular mortgage, the bank will expect to have the mortgage paid; the bank, however, will give the heirs the opportunity to sell the property. After all fees, mortgage, and any liens are paid, the net proceeds will be given to the beneficiaries.

In addition, should the value of the home decrease since the reverse mortgage was first taken, the debt will remain with the home and no attempts to collect from the heirs will be taken. In this case, the reverse mortgage could be considered a 'good investment' for the Senior who was able to 'enjoy' their nest egg & maybe was able to share it with their heirs together while the Senior was living.