These loans come with onerous expenses, but they do have some redeeming value. Read about the pros and cons, and check out the resources provided below.
The upsides of reverse mortgages
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You can choose how to receive the money: fixed monthly payment, lump sum, line of credit or some combination of these options.
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Income from reverse mortgage generally does not affect Social Security or Medicare benefits.
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If you "outlive the loan," meaning you receive more in payments than your home is worth, you will never owe more than the value of the home, according to the Federal Trade Commission, or FTC.
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Loan advances are generally not taxable.
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Most loans do not have income requirements.
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Homeowner retains title to home.
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No
payments are due until last surviving
borrower dies, sells home or no
longer lives in home as primary
residence.
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HECM programs allow borrower to live in nursing home or other medical facility for up to 12 months before loan becomes due.
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After the home is sold and the loan and fees are paid to the lender, any remaining equity in the home belongs to you or your heirs.
Do you need a one-time payment to help pay for home improvements or property taxes? Consider a single-purpose reverse mortgage. Call the Area Agencies on Aging to explore this option at 1-800-677-1116. Ask for information about loan programs for home repairs or improvements or for property tax postponement. To find an agency near you, visit www.eldercare.gov.
Do you need money for another purpose altogether? Do as much homework as possible before contacting an HECM or proprietary lender. Below are some links that provide further information:
