In a time of financial insecurity, reverse mortgages for seniors can provide some relief for an age group who are often living on a fixed income.

While they may not be the answer for all, they can be the ideal solution for many who are facing monetary difficulties.

A reverse mortgage can be explained most simply as a type of home equity loan for which no repayment is necessary until the homeowner dies, sells the property, or no longer uses the property as a permanent residence.

Since the decision by the bank or finance company is not based on the homeowners income, these reverse mortgages are fairly easy to obtain for the more elderly members of our society, particularly so because they have most of their money tied up in their property, which is what these types of mortgages are leveraged on.

There are some non negotiable stipulations though, including…

• The homeowner must be at least 62 years of age
• The house must be either paid in full or with just a small balance left on the mortgage
• Insurance and taxes must continued to be paid by the homeowner
• Attendance at a mandatory counseling session is required to ensure full understanding of the mortgage process

The method behind a reverse mortgage is simple. A loan is obtained based on the equity in the home, with disbursements available in three different forms. The amount of the loan is dependent on the value of the home and the level of equity.

This loan can be had in a single lump payment or as a series of monthly payments; it is up to the homeowner to decide which they prefer. Homeowners are free to spend the loan on whatever they see fit to, with paying bills, making home improvements and going on trips being just a few of the options available.

As part of the reverse mortgages for seniors system, no repayments may ever need to be made by the senior citizen. Well, no repayments until certain conditions are met anyway. Repayments need only be made in the case of the following occuring…

• The homeowner dies
• The property is sold by the homeowner
• The homeowner takes up long-term residence at the home of another family member or at a nursing home

So, there are clearly some major benefits to be had from reverse mortgages. When looking at the benefits though, still bear in mind the fact that a large closing fee may be due on the signing of the mortgage papers. This fee is typically larger than that of a traditional mortgage and it can vary significantly from place to place..

As with any financial decision, all aspects of reverse mortgages for seniors should be closely examined before signing the paperwork.

As you or a member of your family reaches retirement you’ll want to read more about reverse mortgages pros and cons. You can also read more about reverse mortgages for seniors here.

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