Reverse mortgages are one of the largest growth areas in the mortgage business. These mortgages offer older people the opportunity to get cash based on the equity they have in their homes. When the reverse type of mortgages are used, the lender pays the home owner an agreed upon rate. The homeowner does not need to pay the reverse payment back, but can use the money in almost anyway they would like. There are many reasons that these loans can be a great investment, and there are those that are not as good. What is important is that more and more people are turning to reverse mortgages as they age.

A mortgage of the reverse type pulls out the cash held in equity in a home, giving the homeowner the funds they may want or need. The money is not paid back, but, at the end of the loan period, which is usually upon death of the homeowner or upon sale of the home, the reverse mortgages become due. There are stipulations in all of these mortgages.

But, why would any one want a reverse mortgage? Why are more and more Americans turning towards reverse mortgages for their needs? In many cases, these loans are great ways to get the cash that they need. Oftentimes, the money can help homeowners meet their financial needs. They can be used to pay off medical bills. Reverse mortgages can be used to prepare for long term care. And, there is the flip side of all of these uses. The reverse is that many people take them out to enjoy life. They purchase an apartment in another country. They take trips and see the world. Perhaps they want to purchase a second home in a tropical area. Whatever they want to use it for, the money from reverse mortgages can help them do this.

When first introduced, the reverse loans were slow to gain speed. People were hesitant to step into these types of mortgages. It seemed risky. Mortgages of the reverse type, once they gained ground and more people understood them, have begun to be the fastest growing loans. In 1989, the federal government began backing the reverse loan. The National Council on Aging is promoting the reverse loan as a great way to pay for home modifications, medical care, and in-home care to avoid the nursing home years. These loans can help homeowners prepare for the last years of their life, whether that be for living the high life or paying for the home improvements they need.

But, there are a few downfalls to these options. Reverse mortgages can be taken out on many homes. Oftentimes, this can leave elderly home owners vulnerable. First of all, there are less than reputable people trying to cash in on reverse loans and can be found going door-to-door to sell them. Also, they can be quite costly, with high rates and often closing costs can top $10,000. It is wise that anyone considering a reverse mortgage do so after careful consideration of their needs and the needs of those who stand to inherit the property.

At any rate, there are more and more individuals taking reverse mortgages. It can be quite a benefit to those living in a paid off home with little to no income to pay for expenses. 


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These reverse mortgages are expected to grow even more in the coming years, especially as families move away from the “old homestead” and retirement income is constantly threatened. Will you be one of the people who cashes in on these reverse mortgages to finance your retirement years?

Reverse Mortgage - Is One Right For You?



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