Why the Elderly Need to Beware of Reverse Mortgages

Reverse Mortgage Caution SignWhen a person retires, it’s important that their financial needs are met. In essence, a reverse mortgage is intended to do just that. However, there are a few aspects of a reverse mortgage that the elderly should be aware of in advance. The following will take an in-depth look at exactly why people, especially senior citizens, should be cautious when it comes to reverse mortgages.

Reverse Mortgage Details

A reverse mortgage is intended to provide assistance to elderly individuals as a means of lessening payments as a person grows older. To understand just how a reverse mortgage can be risky for the elderly, it’s first important to know what a reverse mortgage entails. A reverse mortgage can:

  • Provide relief for mortgages and home-related expenses for anyone over the age of 62
  • Provide loans against the value of the home that don’t need to be paid back until moving out or dying
  • Be used for monthly mortgage payments and other applications
  • Be structured in a number of different ways

Why Reverse Mortgages Can Be Risky

While there can be a wealth of benefits for the elderly when receiving a reverse mortgage, there are certain things that everyone needs to look out for when applying for this loan. For instance, there are times when the elderly simply won’t be able to afford a reverse mortgage. It’s important to note that a reverse mortgage doesn’t take away everything that will need to be paid, as borrowers will still be required to pay insurance, property taxes, and any maintenance that needs to be taken care of. It’s also essential that anyone considering this loan looks at all of the fees attached to it beforehand, as upfront costs can be relatively high, though the fact that the loan starts to cover mortgage payments immediately does help with this.

In regards to elderly couples, make sure that both names are on the deed of the house, as there’s actually a chance that the house can be foreclosed upon if one spouse dies and the other does not have their name on the deed at the time that this occurs. Reverse mortgages often require counseling on what the loan entails and the advantages and disadvantages of acquiring one. While this can be relatively beneficial, it can also be exceedingly time-consuming. It’s also extremely important to understand the many options available for a reverse mortgage. If you don’t completely understand, you could choose a loan that isn’t the best choice for you and your specific situation. There are three ways in which a loan can be provided to the elderly: a line of credit, monthly payments, or a lump sum. Every elderly person needs to identify which of these three loan types would suit them best before applying.

If you have questions about reverse mortgages or any other aspects of elder law that you may simply need clarification on, don’t hesitate to contact us today. Call us today or fill out our online contact form and we will get back to you within 24 hours.

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