What Is A Reverse Mortgage?
Are reverse mortgages a better way to go than bankruptcy? This question doesn't have an easy answer, and you should always look at your own circumstances before making a decision. It's important to realize that these kind of decisions have long-term implications, but there are some things we can say about each of these financial options.
Reverse mortgages are loans that specifically target senior citizens and involve using their home equity. You must be at least 62 years old to receive a reverse mortgage.
Let's say you own a $200,000 home, and you own it free and clear (which means you don't owe the bank anything anymore). You can borrow a certain percentage of the equity in your home, and that amount will be paid to you at a specified time such as on a monthly basis. You won't have to make any mortgage payments, and nothing has to be repaid until the senior citizens move or die. (You don't necessarily have to own the home free and clear, as some lenders will simply use whatever equity you may have.)
You might think that this sounds like a great deal, but don't forget that the reverse mortgage has to be repaid at some point. If you don't repay the loan within your lifetime, then the lender will end up taking your house and leaving your children or other heirs with nothing. Of course, this might not be a big deal to you if you do not have any living relatives or if your immediate family members are doing quite well. You might need to use the money for your own needs, and you certainly have the right to do so. However, you should think carefully about the consequences including the possibility of a bank taking over your house at some point.
Did you know that a reverse mortgage may change your eligibility for Social Security benefits? These are the type of things that you need to find out about before making a decision. Never let anyone push you into making a decision and don't get too excited about the money that you would receive. Remember that the loan has to be repaid at some point whether it is during your lifetime or during the life of your heirs.
What about bankruptcy as an option? We would never say that you should take bankruptcy lightly or jump into it without weighing your options carefully. However, if you have a significant amount of debt, bankruptcy may be better than getting a reverse mortgage. This could wipe out your debts without having to put your home on the line. This is especially significant if your debt comprises unsecured credit card debt because your home is usually safe from that kind of debt.
Reverse mortgages are loans that specifically target senior citizens and involve using their home equity. You must be at least 62 years old to receive a reverse mortgage.
Let's say you own a $200,000 home, and you own it free and clear (which means you don't owe the bank anything anymore). You can borrow a certain percentage of the equity in your home, and that amount will be paid to you at a specified time such as on a monthly basis. You won't have to make any mortgage payments, and nothing has to be repaid until the senior citizens move or die. (You don't necessarily have to own the home free and clear, as some lenders will simply use whatever equity you may have.)
You might think that this sounds like a great deal, but don't forget that the reverse mortgage has to be repaid at some point. If you don't repay the loan within your lifetime, then the lender will end up taking your house and leaving your children or other heirs with nothing. Of course, this might not be a big deal to you if you do not have any living relatives or if your immediate family members are doing quite well. You might need to use the money for your own needs, and you certainly have the right to do so. However, you should think carefully about the consequences including the possibility of a bank taking over your house at some point.
Did you know that a reverse mortgage may change your eligibility for Social Security benefits? These are the type of things that you need to find out about before making a decision. Never let anyone push you into making a decision and don't get too excited about the money that you would receive. Remember that the loan has to be repaid at some point whether it is during your lifetime or during the life of your heirs.
What about bankruptcy as an option? We would never say that you should take bankruptcy lightly or jump into it without weighing your options carefully. However, if you have a significant amount of debt, bankruptcy may be better than getting a reverse mortgage. This could wipe out your debts without having to put your home on the line. This is especially significant if your debt comprises unsecured credit card debt because your home is usually safe from that kind of debt.
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