What is a Reverse Mortgage?
Seniors should understand exactly what is a reverse mortgage. For many it can make the difference sacrificing quality of life or enjoying the “golden years.”
As seniors age, their incomes do not generally increase while their needs do. Their homes need repairs and, in some cases, accessibility improvements. Chronic illnesses require ongoing treatments. Prescription drugs can be expensive. Cars wear out and either need repairs or replacement. Seniors with declining mobility may need more assistance with daily tasks.
Seniors who cannot afford these growing expenses may have to sacrifice their quality of life, independence and even their health. They’re usually reluctant to turn to their family for help and home equity loans can be expensive and must be repaid — impacting their already tight cash flow situation. Studies by AARP have shown that seniors will often sacrifice considerable quality of life in order to remain in their homes for as long as possible. Seniors of all races have the highest rates of homeownership. Studies show that seniors have the highest median home equity compared to other homeowners. That’s why reverse mortgages frequently are great options for seniors who are looking for extra income. The conversion of their home equity into cash significantly add to the fixed incomes of many senior homeowners.
So, What Is a Reverse Mortgage?
Also known as a conversion mortgage, a reverse mortgage uses the home as collateral to get cash. In many ways a reverse mortgage is similar to a conventional mortgage, but the key difference is that the homeowner doesn’t need an income to qualify and there are no monthly loan payments.
With a reverse mortgage, the loan and the interest on the loan are paid off when the property is sold, during the homeowner’s lifetime or after his or her death. The proceeds from the sale of the property satisfies the loan commitment, even if the sale price is less than the combination of the loan and interest. Reverse mortgage lenders by law must accept the sale price, whatever it is, and cannot attempt to go after the homeowner’s other assets.
If you or a loved one feels you might be interested in a reverse mortgage, please give me a call at 720.641.3482 or email me. I’d be happy to further explain how a reverse mortgage works and answer questions you may have about Colorado reverse mortgages.
Reverse Mortgage Consultant - Denver, Colorado