Review Mortgage Lenders

reverse mortgage information aarp

Is a Reverse Mortgage the Right Choice for You?— AARP Bulletin

A tale of two reverse mortgage borrowers who had two very different outcomes.

Tom Kelly: Let's keep seniors from falling through the cracks

Sometimes, the best-laid plans …

A reverse mortgage historically has enabled senior homeowners to 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 payment. Reverse mortgages are available to individuals 62 or older who own their home.

Funds obtained from the reverse mortgage are tax-free. The proceeds can be received in a lump sum, regular monthly payments, a line of credit or in a combination of those options. Interest is charged on the amount drawn, adding to the original amount. When the house is sold, or the last remaining borrower dies or moves out of the home, the loan amount plus the accrued interest is repaid. The borrower makes no monthly payments and cannot owe more than the value of the home.

We have a friend – let’s call her Sally – who gathered all the reverse mortgage information she could find for her mother, now age 97. Sally even attended the mandatory reverse mortgage counseling session in her mom’s behalf.

Obtaining a reverse mortgage

Reverse mortgages: an overlooked and avoided solution

With many baby boomers entering retirement with underfunded retirement savings, tapping home equity may be a good solution to provide needed funds for daily living expenses. However, only 2% of eligible homeowers have taken out a reverse mortgage.

Reverse mortgages earned a bad reputation when first introduced, as some older homeowners were pressured to use loan proceeds to complete unnecessary home improvements or invest in risky financial products. This reputation, coupled with a poor understanding of the product, cause many who might benefit to not consider the product.  

While reverse mortgages are unpopular, they may be the key to a comfortable retirement for many baby boomers. According to the Employment Research Benefit Institute, 41% of baby boomers have no retirement savings account. Even more troublesome is the fact that 44% of baby boomers entering retirement will not have adequate income for basic living expenses. However, 74% of baby boomers are homeowners, and tapping home equity may be the solution for unprepared baby boomers to acquire needed funds in retirement.

Мы рекомендуем: санаторий радуга в сочи !