Reverse Mortgage Loans

There are a lot of myths dancing around about Reserve Mortgages these days. It seems that most people think that if you're age 62 or over and need money to help pay for home improvements or a cruise to the Bahamas, a reserve mortgage is perfect for such desires - not so! Reserve mortgages were created with a very specific purpose in mind.

A reverse mortgage loan is a federally insured private loan for senior homeowners that enable those over the age of 62 to translate a portion of their home equity into cash. In dealing with reverse mortgages, no repayment is necessary until the homeowner decides to sell the home, decides not to use it as the principal residence, or dies. In case of death, the home is sold or refinanced by the inheritors to pay off the mortgage and the remaining equity is given to the heir.

A reserve mortgage loan was created with one purpose in mind: to help seniors on a tight budget obtain money for living expenses. This type of loan is specifically for helping those seniors who may lose their house otherwise, or not be able to buy food or pay medical costs. The cash obtained from a reverse mortgage can be paid all at once in a single lump sum of cash, as a regular monthly cash advance, as a credit line account, or as a combination of these payment methods.

A disadvantage for those seniors using a reverse mortgage loan for frivolous spending is that if they are ever in dire straits, which is the purpose of the loan, they may have already dissolved their home's equity. Another disadvantage is that unless one is expecting to stay in their home for at least five years, reverse mortgages are not very beneficial. Up-front costs are very high and unless one is certain that they will be in their home for over five years, the benefits are close to none.

The benefits of a reverse mortgage are straightforward: If medical bills and climbing expenditures are making it difficult to live day to day, and one is planning on staying in the home indefinitely, then it is the perfect way to obtain extra cash to keep afloat, without the hassles of an extra monthly payment.

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Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.

See Also:

Advantages and Disadvantages Of A Reverse Mortgage
Betty and John, are in their mid-seventies and are currently weighing the advantages and disadvantages of a reverse mortgage as a way of freeing up some cash. The couple purchased their home 45 years ago for about $14,000 since then home values have skyrocketed and recent single family homes in ... more...

Who Could Benefit From A Reverse Mortgage?
What is a "Reverse Mortgage?"Also known as a Home Equity Conversion Mortgage (HECM)a reverse mortgage,is a popular way older homeowners (62+) can convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payments ... more...

Reverse Mortgage: A Dignified Way for Retirees to Supplement Income and Take Care of Expenses
For many Americans reaching the retirement age, the equity build up in their home is their only real asset. Reverse mortgage is a way to tap into this asset and create a stream of income needed for retirement or take care of an unexpected financial need that is usually related to health care costs ... more...

Reverse Mortgage Calculator
Most seniors who are interested in learning more about the Reverse Mortgage process will often use a Reverse Mortgage Calculator. Most online reverse mortgage calculators require the current value of the home in question, the total amount of any liens on the property, the ages of any individuals on ... more...