Do you need a Reverse Mortgage for a Senior Citizen?
If you truly want to stay in your own home, but simply can't afford the bills, taxes and maintenance issues, you might want to look into a Reverse Mortgage. In today's tough economy, the Reverse Mortgage might help some seniors out there!
For many seniors, the home is the largest asset they own. More than 50% of seniors own their own home outright, where another 25% are almost there. They have all that equity but it does them little good as its "stuck" in the homes value.
What IS a Reverse Mortgage for Senior?
This is a tax-free loan, from the bank, who pays you a monthly income using the equity sitting in the value of your own home. The home owner actually gives up some equity in exchange for a monthly payment from the bank.. truly the reverse of a mortgage. You make no payments, only receive cash from the bank... in lump sums, monthly payments or something like a line of credit, money as needed. Your bank will explain just how this all works... and offer solutions based on your specific needs.
How is this Reverse Mortgage repaid?
The reverse mortgage is good for your life, no problem... at your death, or if you move or sell the home, the loan repayment comes into effect. Normally (but please be sure this is in the paperwork you sign), you can't be forced out as long as you occupy the home... make sure you understand the details.
Your family must pay back the loan (monies you have taken out of the homes equity) whether they sell the home or not. Assuming they sell the home, the monies left after they pay back the funds are put into the estate (just like they would have been had the reverse mortgage never occurred). If the home is sold at less than is owed back to the bank, the shortfall is not the family's responsibility.
So this sounds like a win-win for the family (and you!). You stay in your home, have the income you need, and IF the family wants to keep the home later, they simply pay the amounts you've drawn out (possibly through a new mortgage)... or they sell it and get the funds that are remaining in the homes equity.
How do they determine my monthly payment?
You must be at least 62 years old, and the monthly payment they will pay you is based on several factors: the equity and condition in your home, your age, interest rates at the time you get the reverse mortgage.
The older you are, the more you will receive... this is logical. If you have $100,000 equity in your home, but are age 62, they need to spread that $100,000 over your life expectancy -- maybe 25 years. However, if you are age 75, that same $100,000 is spread over 10 years.. thus larger payments can be drawn.
Taxes and Federal Retirement Programs with Reverse Mortgages
The payments you receive from the Reverse Mortgage are not taxable... and that's always great. These payments also do not affect your normal Social Security benefits and your Medicare Federal insurances.
However, if you receive Federal Assistance like Medicaid (for low income) or SSI Disability Payments, your payments may affect or disqualify you from the Federal payments.
Think Twice... do your homework so you know what you are doing!
Just be up front with the bank, they need to know your full circumstances so they can guide you correctly on these interesting Reverse Mortgage payments.
Read and ask questions -- don't let someone talk you into this reverse mortgage until you are sure this is in your best interests.
Check out another article on Reverse Mortgage Pros and Cons.
Get your spouse or family involved... two heads are always better than one. Something you remember, they didn't hear, or vice versa... its hard to comprehend something new like this, so get help in understanding the whole scenario.
Reasons to consider a Reverse Mortgage for Senior - letting you remain in your own home!