Reverse Mortgages help seniors

Mortgage payments can become increasingly difficult to make, especially if an unexpected expense crops up such as an illness or an accident.

For seniors, there is a solution other than foreclosure that is available if you can not make monthly mortgage payments.

Aissatou Sidime, of the San Antonio Express-News, wrote an article on July 23, 2006, entitled, “Reverse mortgages offer added income, but they aren’t for everyone.”

This article deals with an elderly woman named Ana Morlett who became very sick with a brain tumor and couldn’t afford her mortgage payments anymore.

She turned to the help of a reverse mortgage, which is available to people over the age of 62.

“Morlett heard about reverse mortgages, which let seniors tap the equity in their homes but defer mortgage payments. She used one to pay off the $45,000 she owed on her house and to get $12,000 to make repairs.”

Due to her sickness, Morlett had to quit her job, which left her with an income of only $1,400 a month with a $832 monthly mortgage payment. This income would barley leave her with enough money to pay the mortgage payment each month, so she turned to the help of a reverse mortgage.

“Roughly 86,000 homeowners have tapped their equity through federally insured reverse mortgages, according to the Federal Housing Administration.”

These reverse mortgages can be a good idea for people who are in need of money immediately.

But there are also some important stipulations to keep in mind when dealing with reverse mortgages. Reverse mortgages have been available since 2001, and, according to the article, they are gaining popularity rapidly.

“To get a reverse mortgage, homeowners must be at least 62 and must meet with a certified housing counselor. That's because reverse mortgages have some unique features: Lenders don't check the borrowers' credit or income. Plus, reverse mortgages don't have to be repaid until the senior no longer uses the property as his or her primary residence. But the balance on a reverse mortgage grows as interest accrues. The loan must be repaid within 12 months after the owner dies or moves out.”

There are a variety of options available for someone looking to take out a reverse mortgage, but an important thing to remember is to always think about the long term. Interest rates vary by the loan and the amount of money one will receive is also based on a number of different factors.

Seniors need to think about if they are going to need the equity in their home for something important in the future, such as live-in care.

“Clyde Farrell, a certified elder law attorney and certified financial planner in Austin, urges his clients to delay getting a reverse mortgage as long as possible for another reason. ‘Retirees need to be planning 10 to 30 years out and considering a reverse mortgage in reference to long-term care needs,’ he said. ‘Will the house need to pay for that care?’”

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