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Reverse Mortgages: A Brief Introduction

Apr 10, 2008
With larger numbers of older Americans reaching retirement age than ever before, along with many others who have already stopped working, the need for long-term health and medical care is gaining more relevance in society. No matter if it is about finding a nursing home or providing some sort of home care, it is difficult to locate the funds you need for them. Many senior citizens are unsure of where they will get the money they need to continue caring for themselves if health problems should arise. This may be why reverse mortgage getting more attention in the media.

More and more, as you read the newspaper, turn on the television, or browse financial investment websites, the subject to reverse mortgages is cropping up. Many seek to shed some light on this often murky topic by highlighting the different advantages and disadvantages that are associated with reverse mortgages. Notably, two major organizations that are focused on the elderly, AARP and the National Council on Aging (NCOA), have endorsed reversed mortgages as a viable option to provide long-term care solutions for seniors in certain circumstances.

In a recent report conducted by the NCOA stated that over 13 million people are eligible to use a reverse mortgage to fund their long-term expenses at home and help many retain their independence longer. This option has some definite advantages and offers alternative financial resources from which to draw from so less money is taken from Medicare and Medicaid, both of which are under enormous financial pressure due to the sheer volume of retirees who rely on them.

Before going any further, it will be good to define what a reverse mortgage is exactly. First, they are also known as home equity conversion mortgage. Reverse mortgages are actually supported federal agencies like FHA and HUD. Only people sixty-two and older are eligible to use a reverse mortgage program. This loan is called a 'non-recourse loan', because it does not have to be paid back in the event that the recipient dies. Put a different ways, the family is not liable for the repayment of the reverse mortgage.

The reverse mortgage, as the name implies, works in the exact opposite way that a normal mortgage does. You do not have to repay a reverse mortgage. Rather, it is the homeowner who gets a regular check. In fact, there are no monthly payments. Repayment is required when the homeowner leaves the home for a nursing facility or passes away.

The money received from a reverse mortgage is totally tax free and does no affect your current Medicare or SSI benefits so seniors do not have to worry about looking money from their monthly incomes.

If you are considering a reverse mortgage, it is in your best interest to determine if your circumstances call for such a loan measure. Not everyone may choose to use a reverse mortgage to deal with their particular situations but it is still remains a viable option for many. Yet, for those who have some difficulty making ends meets each month or find they are in need of costlier care options, the reverse mortgage represents relief and assistance.

Many senior citizens are taking advantage of the financial benefits and using the extra money that a reverse mortgage provides to pay for in-home care options, prescription drugs, to pay off linger debts, and even improve their homes so they can function there in safety and comfort.
About the Author
Joe Kenny writes for Only Stop, compare buy to let mortgages in the UK, visit them today for fixed rate mortgages or Glitec for more mortgages and information.
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