Reverse Mortgages - What's the Deal?

Reverse mortgages can be a great option for home buyers and home owners 62 years of age or older.  A reverse mortgage allows the owner to stay in his home until he dies without having a mortgage payment (other than taxes and insurance).  Hence, if your monthly budget is tight and making that mortgage payment is a struggle, a reverse mortgage may be the solution.

Homeowners who own their home outright or have considerable equity can refinance into a reverse mortgage and either pull out a lump sum, set up a monthly draw for a specified period or do both all while getting rid of their mortgage payment.  For those retirees who may be relocating to a retirement destination, they may find that a reverse mortgage is the best way to finance the purchase of their new home.  They may have sold a home and have enough money to either pay for a home in cash or to put a large down payment on the home after which they would have a monthly payment on a traditional mortgage.  Rather than tying up so much money in a home, they could put down the minimum requirement (as little as 20%) and keep the rest of their money for other needs, including having it to augment their income.

Here's an example:  a retiree on a fixed monthly income of $4,000 with a $1,000 mortgage payment could free up that $1,000 by switching to a reverse mortgage and he could possible get money out for a family vacation or to help his children get into their first homes, for an investment or any other number of reasons.  A reverse mortgage isn't for everyone but it can certainly alleviate financial obligations for those who qualify and have a very tight budget.

There are down sides to a reverse mortgage and nothing is for certain.  When considering a reverse mortgage, it's important to get all of the information regarding the various mortgage options and analyze them with regard to your specific situation.  You can learn all about them by visiting HUD's reverse mortgage site.

If you would like to know if a reverse mortgage is right for  you or someone you love, please contact a loan consultant who understands how reverse mortgages work.  I'm licensed in California and Nevada and would be happy to help anyone interested in these two states.  Feel free to contact me at 702-812-1214 with any questions you have regarding reverse mortgages or traditional mortgages such as FHA, VA, conventional and Jumbo loans.