Having Trouble Deciding If A Reverse Mortgage Is Right For You? Here Are 3 Situations In Which It Makes Perfect Sense
If you're a senior who owns your home or has a large amount of equity, then you may qualify for a reverse mortgage loan. This type of loan requires no monthly mortgage payments – instead, the lender pays you. In return, the lender places a lien against your home that allows them to take possession of it when you pass away. Many seniors struggle to know when a reverse mortgage is the right option for their financial situation. To help you understand when this type of mortgage makes sense, below are three situations in which it's a perfect fit for your financial needs.
1. You Don't Have Any Heirs
If you don't have any heirs, if you're estranged from them or if they don't want your home, then you're a perfect candidate for a reverse mortgage. This type of mortgage essentially works by converting the liquidity in your home to cash that you can use for any expenses that you want. Heirs to the estate can purchase the home, but they essentially need to buy out the remainder of the reverse mortgage in order to do so.
When you don't have any heirs, however, the fact that the lender owns your home after you pass away simply does not matter. You're free to use the funds from the reverse mortgage to relax, take vacations and enjoy your retirement. This makes it a perfect option for seniors who don't need to pass on their property to children or grandchildren.
2. You Need to Pay Medical Bills
It's common for seniors to face mounting medical bills for necessary care – Medicare doesn't pay for everything, and you'll need to cover the remainder in order to continue receiving care. If you're struggling to pay your medical bills, a reverse mortgage can give you the funds that you need in order to pay current and future bills.
However, you should note that you will be required to live in your home and keep it in good condition. If you're seriously ill and facing the possibility of moving into an assisted living facility permanently, then this type of mortgage may not be the right option for you.
3. Your Spouse Passed Away and You're Having Trouble Making Ends Meet
Unfortunately, many seniors have trouble with debts and daily living expenses when they lose their spouse's retirement and social security income. Financial hardship can become a constant source of worry, ruining your ability to enjoy your senior years. With a reverse mortgage loan, you'll receive the cash you need to pay your living expenses and pay down debts (like credit cards or your spouse's medical bills) while remaining in your own home.
While a reverse mortgage loan is not for everyone, it's the perfect solution for seniors in the above three situations. If you're interested, contact a reverse mortgage lender. You'll be required to meet with an independent counselor from the department of Housing and Urban Development before you're able to agree to the mortgage, which gives you the chance to go over your financial situation and ask more questions about what a reverse mortgage entails – this helps you discover if it's the right choice for you.