Reverse Mortgage Loan Blog

She lives down the street from you. She’s that senior lady you wave to working in her yard when you drive by. Did you know that last week she had only $35 to spend at the grocery store, and that had to cover a week’s worth of food? Last month her utility bills were higher than normal and she had to do without one of her prescriptions in order to keep her electricity turned on.

This is not a hard luck story it is real, and it takes place all across the city of Edmond. Seniors living out what should be the golden years of their lives pinching pennies and doing without some of the basic necessities of life. And what happens when they are faced with mounting medical bills or even in-home health care? What will they do then?

Our tough economic times are taking a toll on seniors. Many have realized tremendous losses in their investments while others have watched the cost of living rise well beyond their ability to afford. As a result, many are investigating the ways a reverse mortgage might benefit them.

Any senior older than the age of 62 who is a homeowner and has equity in their home has the option of exploring the pro’s and con’s of a reverse mortgage. There are no credit qualifications and no health screenings. If you own your home free and clear or even if there is an existing mortgage a reverse mortgage could prove beneficial to you.

You can take out a reverse mortgage simply to pay off your existing mortgage and have no house payment for the rest of your life. One senior said she was so relieved after taking out her reverse mortgage that she “just giggled when it came that time of the month where she used to make her mortgage payment.” Many seniors find it too distressing to sell their home and downsize. A reverse mortgage allows them to remain in their homes without ever making another payment.

Many seniors take out a reverse mortgage and draw cash out for a variety of reasons. Some use it to cover mounting medical bills while others use the money to travel or remodel their home. A reverse mortgage allows the senior to use the money in any way they see fit. There also are a variety of ways to take the cash. Some take a lump sum while others take equal monthly amounts to supplement their retirement income. If you prefer a line of credit that can be accessed when you need it, that too is an option.

A relatively new way to use a reverse mortgage is for the purchase of a home. Many seniors have made the decision to “downsize” from their current home to a smaller home that requires less energy and money to maintain. These seniors can take the equity from the house they sell and apply some or all of it to a new home and finance the remainder using a reverse mortgage. Just like other reverse mortgages, the seniors can live out the remainder of their lives without making a single mortgage payment.

Those are three ways a reverse mortgage can be used to help seniors find the money they need to live. But if you’re considering a reverse mortgage you should take the time to carefully consider all the ways a reverse mortgage could affect you.

First of all, you need to know that before any senior can apply for a reverse mortgage, they must participate in a federally mandated reverse mortgage counseling session. These sessions are conducted via telephone by an FHA approved third party. It also is recommended that the senior consult with their children and heirs before signing any documents. You should be in no hurry; there are no deadlines to reverse mortgages.

For many seniors, a chat with their financial planner is in order. You should understand how a reverse mortgage can affect the long-term equity in your home. If necessary call a family meeting before making this decision. Then whichever way you choose, everyone involved will have had the opportunity to understand how a reverse mortgage can help seniors live their lives with dignity and cash flow.

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