Could A Reverse Mortgage Save Your Parents’ Lifestyle?

A MORTGAGE IN REVERSE

Helen didn’t want to sell her house. She was having a tough time paying for prescriptions, medical bills and she would need a new car soon. If she sold her house, she’d have to make repairs anyway.

“I just didn’t want to move,” she said. “I probably could’ve gone into something smaller and cheaper.“

That’s when Helen remembered something she heard about in a real estate seminar years ago. She was going to research reverse mortgages. She eventually took one out.

“I’m not an extravagant person. It didn’t take much to keep me happy.“

She was able to put in new windows and floors. She paid off her credit card debt, too.

“That was the biggest relief to get rid of that because it was about 8,000 dollars.“

Allied Home Mortgage Branch Manager Russell Street said more seniors like Helen are becoming interested in reverse mortgage loans.

“This loan has grown about 400% over the last several years,“ Street said. “People are, obviously, living healthier, they’re living longer lives. They’re outliving their money.“

AARP.org describes a reverse mortgage as “a loan against your home that you do not have to pay back for as long as you live there.”

“It’s not for everybody, but it’s a Godsend to a lot of folks,“ Street said.

ASKING IF IT’S RIGHT FOR YOU

He says one of the biggest questions seniors must look at is what their future plans are for their home:

-They are planning to stay there for a long time:
“Then this is going to be a perfect fit for them,” Street said.

-They are planning on moving or selling:
“They probably don’t want to do a reverse mortgage because it’s going to get them upside down eventually,” he said.

Specialists say you don’t have to make monthly repayments on reverse mortgage loans and that you don’t need a minimum amount of income to qualify.

“Bankruptcies are not an issue.” Wells-Fargo Home Mortgage Specialist Joan Dawson said. “We don’t look at FICA scores. It doesn’t matter because you’re never making a payment.“

But specialists say that the reverse mortgage is not the cheapest out there.

“The closing costs are probably on the downside,” Dawson said. “That’s probably the most negative thing on the reverse mortgage because you are prepaying all the administrative fees in the beginning to do the reverse mortgage.“

“Typically, a reverse mortgage is going to cost you about five to five and a half percent in closing costs. So, if you have a hundred thousand dollar house, your closing costs are going to be between about $5,000 and $5,500.“

CLICK AND LEARN MORE

Reverse Mortgages from AARP:
http://www.aarp.org/money/revmort/

National Reverse Lenders Association:
http://www.nrmla.org/

Raising Money With Reverse Mortgages from CBSNews:
http://www.cbsnews.com/stories/2006/02/02/earlyshow/living/money/main1275596.shtml