Reverse Mortgage Loan Blog

SARASOTA – There is a new way for people older than 62 to acquire access to their home equity without enduring the pending nightmare of paying off loans.

They now have the option of a reverse mortgage, which converts a portion of their home’s value into cash. More and more seniors are opting to go that route to pay for medical bills, prescription medicine and other skyrocketing costs.

“Reverse mortgage has become really the only solution for people in this sort of jam,” said Stewart Ogilby, a
Sarasota-based consultant who has talked hundreds of people through the process. “As long as people stay in their homes for a long enough period of time … I don’t see any downside to this product.”

Typically, homeowners should not apply for a reverse mortgage if they intend to sell their homes during the next three to five years. There would be little money left to gain after the sale.

There have been cases where people have lived in a house for at least 30 years and have more than $300,000 in equity waiting for them. Social Security, part-time jobs and pensions give them some income, but it is not always enough.

One-third of that equity would go a long way toward paying off debts and doctor’s bills and supplementing a fixed income.

Perhaps the only people who lose out are the children of those homeowners who may be expecting a larger inheritance, Ogilby said.

According to the Sarasota Herald-Tribune, about 50,000 of the roughly 13 million Americans eligible for reverse mortgages went ahead and applied during a 12-month period from the fall of 2004 to the fall of 2005. That number increased significantly from the 7,000 or so reverse mortgages made in 2000.

With more and more baby boomers approaching retirement, that number is expected to grow exponentially in the coming years.

That is fine with Ogilby, who described reverse mortgages as a “non-recourse loan” that comes from a homeowner’s very own “brick and mortar.”

Homeowners never pay for mortgage payments as long as they continue to pay their taxes and insurance and do not allow their properties to fall into poor conditions.

Those who opt for a reverse mortgage can be paid a portion of their equity in one of three ways – in a lump sum, as a monthly income or as a line of credit.

Repayments are not required as long as the homeowner remains in his or her house. Only those ages 62 and older are eligible.

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