Reverse Mortgage issues for Seniors

Back in August we wrote a post about reverse mortgage loans describing what they are and how some people can use them. We tried to be as factual as possible and we tried to describe the overall process. We are not in the business of providing reverse mortgage loans of any kind. As a result we decided to do another post about the subject, this time titled Reverse Mortgage issues for Seniors. It should also be mentioned that as a writer we are against reverse mortgages. Especially when they are arranged by many of the companies that we found on the internet. I am sure that there are many reputable companies out there, but you must also be very careful.

Reverse Mortgage issues for Seniors – Sales and Marketing

The first thing that everyone should remember is that all of these names are just marketing names. The goal is to put you in the right frame of mind when you are dealing with a lender. For example what is the difference between a loan that let’s you draw on it whenever you need cash and pay it off whenever you have cash vs. a reverse mortgage? These type of loans sometimes go by the name Powerline Loans.

Reverse mortgages and powerline loans are much the same. Except in the case of the powerline , the customer is in control of how much they borrow. In the other it is all automated and set up for you.  Personally I like to be in control of my finances. Not some institution which I can only talk to via the phone. Even then I get a person in a call center that is hundreds or thousands of miles away.  I have everything automated and do all banking electronically. But I still like to be able to go to a solid brick and mortar type bank to discuss any issues that I have.

A Payment Every Month

Back to reverse mortgage loans. These loans typically send you a payment each month. The interest is calculated monthly which is added to your balance. Both the interest and the monthly payments can add up quickly so you need to plan carefully before choosing this option. While they say you will never be forced to sell your home. They certainly do want the loan amount owing when you do sell or move to another location. If you pass away while participating in a reverse mortgage, your estate will have to sell the home. The estate will have to repay the balance owing at that time.

As a senior,  having this monthly income can be very helpful to pay bills and augment your total income. It may mean the difference between living extremely frugally and a comfortable retirement or having to move to some other place which you are not comfortable with. It is difficult as a senior to deal with moving homes and dealing with finances that seem to get increasingly complicated. There are a large number of very fast talking sales people who may put pressure on you to take the deal. Never take it on the first meeting and always take someone you trust with you to take notes and help with the decision making.

Important Decisions

This is a really important decision to make financially as well as life style. Do you stay in your own home and build up debt or do you move to another place and buy a less expensive home or do you pay rent? We will discuss some of these options in our next post – Seniors – Sell, Rent or Stay

If you have been dealing with a reverse mortgage and have comments about them either way, please leave a comment. I am sure our readers will be interested in what you have to say about them!