Reverse Mortgage Loans

Reverse mortgage loans allow seniors to cash in some of their equity they have while keeping the home and still live in it. These mortgages are great because you retain ownership and the borrower can use the proceeds from reverse mortgage loans for anything they like.As long as the borrower stays in the home reverse mortgage loans do not have to be payed back. The loan does have to be payed when the homekeeper or borrower sells or passes on. Also if you permanently move away reverse mortgage loans are then due to be payed.
You've finally reached the conclusion that you can't meet all your financial obligations with the amount of income you have coming in each month from Social Security, a pension or your retirement savings. You've heard about reverse mortgage loans where the bank will loan you money against the equity in your house that does not have to be repaid until you sell, pass away or move out. This can be the perfect solution for anyone who has a good amount of equity in the home and is just looking for some financial assistance in paying bills or doing some home maintenance and improvements.

But before you sign on the bottom line for the reverse mortgage loan, you may want to take the following issues into consideration. First, this may affect the amount of money your heirs stand to inherit, as the amount of equity in your home will be reduced by the amount you borrowed. Should you notify your heirs ahead of time and get their opinion or wait until you've officially taken out the loan? Some people decide not to tell them at all. Do whatever you think is best for your family situation, and if you think it will come as a surprise to them, perhaps put a brief notation in your will.

You can take your reverse mortgage loan as a lump sum payment, a fixed monthly payment or as a line of credit that you use whenever you need it. Most people end up choosing the line of credit.

Reverse mortgage loans are tax free and will not affect your Social Security or Medicare benefits. But if you decide to take a lump sum payment, it is possible that your Medicaid eligibility could be affected. For example, if you borrow $5,000 to pay off a credit card and have five hundred dollars left over at the end of the month, this five hundred dollars could be counted as a "resource." If your total liquid resources exceed a particular amount in a given month, you could become ineligible for Medicaid. A Medicaid expert could advise you as to the best course of action to take when you are deciding how much to borrow in a given month.

One of the requirements to obtain reverse mortgage loans is to meet with an approved counseling agency. This will be an excellent opportunity for you to discuss any concerns, have your questions answered, and to evaluate all your options. You can obtain a list of approved counseling agencies on the Web site of the U.S. Department of Housing and Urban Development. You can certainly bring a trusted friend, family member or financial adviser to the counseling session.

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