Reverse Mortgage Information

Recently, Consumer Reports site had written on Feb. 17 that, a HECM (Home Equity Conversion Mortgage) reverse mortgage needs to be considered only as a “last resort”. This is kind of misleading, because reverse mortgages are just loans to American seniors with no monthly payments required. The advantages of reverse mortgages far outweigh the disadvantages. As such, reverse mortgages are seldom the “last resort”, because reverse mortgages have many legitimate uses.

In July of 2008, the Congress amended the laws to permit the HECM loans to fund the purchase of homes. That is hardly termed a “last resort”. The National Council on Aging in the year 2005 initiated a “Use your home while staying at home” program which suggested taking a reverse mortgage to use the proceeds to pay for home modifications and other related expenses. Thus seniors are able to extend their stays in their current homes quite easily and without any financial hardships.

While it cannot be argued that for some people, a reverse mortgage may be a life-saving last resort option, it stands to reason that, reverse mortgage is a new financial tool for the majority of home-owning seniors. It is frequently one of the smart choices to make during retirement, to meet lifestyle expenses.

When taking a reverse mortgage on the home, the senior home owner still retains the title to the home. The senior can elect to receive monthly payments from the lender or as one lump sum payment. The senior can choose to use the money in any way he or she pleases. Going on a dream vacation, Traveling, meeting the educational expenses of grand children, meeting medical expenses and bills, home improvement and repair bills, etc. are only some of the ideas where the money from reverse mortgages will come in handy.

The senior is not needed to repay the reverse mortgage moneys while still continuing to stay in the same home. The money becomes repayable to the mortgage lender only by the heirs of the senior. In that case, the home can be sold and the lender can be repaid with that money. The repayment obligation never exceeds the actual amount of the loan, so the reverse mortgage loan is known as a non-recourse loan.

So, in summary, it is a good idea for home owning seniors to consider taking reverse mortgages to finance their lifestyle expenditures.