Reverse Mortgage

Yahoo Finance: Potential Professionals and Cons of a Reverse Mortgage


A reverse mortgage loan is a potential way for an American senior age 65 or over to use their home equity to meet their retirement financing goals and can be a viable option for those who want their cash flow throughout life want to supplement with a steady income. However, there are potential drawbacks that need to be considered before taking out such a loan.

This emerges from a column published by GOBankingRates and published in Yahoo Finance. One thing that reverse mortgage experts may find encouraging about this article is that it aims to contextualize reverse mortgages compared to other tools available and offer an unusually pragmatic perspective on the product category.

“Reverse mortgages can be a lifeline for seniors in financial difficulty, but they are not for everyone and they come with risks and costs,” writes columnist Andrew Lisa. “Reverse mortgages are just another way for homeowners to develop their equity. Like home equity loans, HELOCs and cash-out refinances, reverse mortgages are loans against equity – but they are structured differently from the others. “

In terms of potential benefits, the column adequately focuses on use cases and how a reverse mortgage has the potential to improve a retiree’s financial condition.

“Seniors can use the payments from these specially structured loans to supplement their income, pay for health care and cover their expenses,” the column says. “Even better, the money is usually tax-free, even though it is used as income. You retain ownership of your home and your Social Security and Medicare benefits are not affected. Perhaps most importantly for seniors concerned with safety, as long as you live in your home, you don’t have to repay the money. “

In terms of potential cons, the column also focuses on the practical barriers that can arise for someone with a reverse mortgage looking to make a change in their life situation, such as: B. the due date of the loan when the resident moves out. The article also mentions relatively common concerns shared by some people, including high up-front costs, loan balance growth over time, complications related to non-borrowing spouses, and more.

“If you die first, your spouse or estate will pay the bill for you, although in some cases a non-borrowing spouse can stay in the house,” the column says. “Even in these cases, however, the surviving spouse no longer receives payments because he did not receive a loan. In many cases, the home is the estate and the home must be sold in order to repay the reverse mortgage loan. This is bad news for all heirs who expected an unexpected inheritance. “

Read the column on Yahoo Finance.