If you need cash, consider alternatives to a Reverse Mortgage first.
Washington, D.C. - infoZine - Seniors are being told that having a reverse mortgage ends their financial worries. This is not altogether true. Despite the claim that the borrowers don’t have to pay back the loan until they either die or permanently move out of the house, there are ongoing financial obligations that seniors need to keep in mind. Before depleting this last major asset through a reverse mortgage, make sure that this finite amount will be enough to meet your financial needs for the future. Would-be borrowers must think about how much money they will still be paying in continuing expenses once they have a reverse mortgage.
Borrower Beware-Continuing Expenses with Reverse Mortgages
- The borrower needs to stay current on all payments owed for property taxes, homeowners’ insurance and, if applicable, all homeowners’ association fees.
- The borrower is also obligated to adequately maintain the home or the loan may be called, for example, if the borrower cannot repair a leaky roof, wood rot or termite infestation.
- If the senior defaults on the loan, there may be a foreclosure (Borrowers with reverse mortgages can and do experience foreclosures).
Alternatives to Reverse Mortgages
Explore eligibility for less expensive programs or benefits
Reverse mortgages are very expensive loans, and as such, they should be considered only as a last resort. Before considering a reverse mortgage, a senior should first determine if he or she qualifies for less expensive programs that offer monetary assistance or cost-cutting benefits. These programs include Supplemental Security Income (SSI), Medicaid, prescription drug discount programs, energy and telephone discount programs, City and County grants and low-cost home improvement loans (sometimes called “single purpose” loans), state property tax postponement programs, In-Home Supportive Services, and Veterans pensions to pay for in-home care.
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