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Using a Reverse Mortgage to Stay Home

Where's the one place most comfortable for the senior to age and get older? According to a study by AARP, 89 percent of adults, want to live at home. They want to stay where the family made lasting memories.

But as a person ages, one face many challenges to remain in place while staying safe and independent. That's why some financial companies how created a mortgage that reverses the monthly premiums.

Reverse mortgages are for homeowners age 62 and older, and the reason for the name "reverse" is because the lender pays the homeowner not the other way around. There are two stipulations to qualify for a reverse mortgage, 1. you must continue living in the home, and 2. it must continue to be the senior's main residence.

How does a Reverse Mortgage work?

How a reverse mortgage works

After many years of paying the mortgage premiums, the home is worth more than what you paid for it. Of course, makes sense, right?

A reverse mortgage can help you convert that home equity into cash so that you can continue to live there for a long time. The cash from the equity is yours to use:

  • To plan for emergencies
  • To pay off credit card debt
  • To enhance your quality of life
  • To increase your income
  • To pay off the home loan

All the costs mentioned are a burden for anyone but especially so for seniors since most live on a fixed income. And for those who live with chronic conditions and health problems, it puts an extra burden on living at home.

Some people believe it's better to sell and move to an assisted living facility or nursing home but before you go, learn about this better choice. It's the option that keeps you at home.

The Benefits of a Reverse Mortgage

  • To maintain a familiar environment
  • To preserve a community connection
  • To feel independent
  • To remain close to family and friends
  • To continue to live in a home, that has deep emotional value

Home Equity

Home equity is the value of your home less the outstanding balance of all liens on the property. You receive cash from its equity. With the cash, you can pay for home modifications that help you age in place. You can install a walk-in-shower or tub or a ramp or lift for the stairs. You can also use the money to pay for other health care expenses like in-home care, medications, and physical therapy.

Unlike home mortgage loans, reverse mortgage requires no income. So, you don't have to qualify, and there's no need to make monthly payments as long as you continue to live in the home. All, you receive, is tax-free cash.

Who Owns the Home?

As long as you remain living in the home, you are the owner. A few requirements of a reverse mortgage:

  • Pay your property tax
  • Pay your home insurance
  • Keep up the maintenance
  • Comply with the terms of your loan agreement

That's it! You will not lose the home if these requirements are upheld. If you sell the home, the reverse mortgage is repaid. After that, the remaining proceeds goes to you.

How a Senior uses a Reverse Mortgage

Using a Reverse Mortgage to Stay at Home

A woman lost her husband in 34 years. They had a blessed marriage and he provided his wife and children with a lovely home. After a dreadful illness, the husband passed away, leaving his wife, age 72, facing serious financial issues. Their daughter learned of reverse mortgages and persuaded her mother to look into getting one.

The mother spoke with a reverse mortgage agent and disclosed her financial problems. The agent listened and then explained how a reverse mortgage is used as an alternative to selling a home.

After she applied and received the reverse mortgage, the woman sleeps better and is living with more peace of mine. She's paid off debts and regained independence. The woman continues to live in her home with all its beautiful memories.

How a Reverse Mortgage Works

It's a type of home loan that allows all seniors over the age of 62 to get cash from the equity in their home. The cash enhances their retirement lifestyle however they choose.

People with a reverse mortgage will continue to live in their homes, retain full ownership and are not required to make any monthly mortgage payments for the loan period.

Instead of monthly repayments, the loan is repaid in one lump sum when the last borrower leaves the home. The borrower is responsible for continued property tax and insurance payment as well as basic home maintenance and compliance with other loan terms.

Home Equity Conversion Mortgage

There are two types of reverse mortgages: the HECM Standard and the HECM Saver. A reverse mortgage agent can help you choose which is best.

After the loan type is chosen and after the existing mortgage is paid off, borrowers can choose to receive any additional loan proceeds in several different ways:

  • A lump sum
  • Monthly payments for either a fixed
  • Amount of time or for the rest of their lives
  • A line of credit
  • Or a combination of all of the above

How to Decide if Reverse Mortgage is Right for You?

Speak with a reverse loan officer, like the trusted professionals at American Advisors Group, to gain a complete understanding of how a reverse mortgage works. It's a big financial decision, so here are some things to think about that will help you.

  • Be honest about your family's goals.
  • Be honest about your finances.
  • Talk to a Licensed Professional about your situation
  • Ask all your questions and your concerns

When researching for information on reverse mortgages, you'll find a variety of sources with differing views. Some are biased, dated or simply not true. Licensed professionals are trained to help you explore your financial situation, give you up-to-date facts and walk you through the process.

Carol Marak
Carol Marak

After seven years of helping her aging parents, Carol Marak has become a dedicated senior care writer. Since 2007, she has been doing the research to find answers to common concerns: housing, aging and health, staying safe and independent, and planning long-term.