More and more people are looking at reverse mortgages as a good method of assisting them in keeping their homes despite the decline in the housing economy and their own shift in finances (usually caused by retirement). The reverse mortgage can be a great method of accessing the money you need in your later years while keeping your home. However, there's a stipulation to the reverse mortgage home that you need to think about seriously before you move forward with obtaining the reverse mortgage. That stipulation is that you must remain in the home in order to not owe money on the property.
There are several groups of people who will want to think about this before obtaining a reverse mortgage loan. They include:
- Anyone who was hoping to get a reverse mortgage loan to assist them in affording their additional rental properties. Although there are some success stories where this can work (when a reverse mortgage is taken on the primary residence), it's a risky way to go.
- People who will likely end up in a nursing home. Most reverse mortgage loans are based on terms which stipulate that the loan must be repaid after the owner of the home has been out of the home for twelve months. This means that you'll have only a year after moving to a nursing home to determine what to do with your home and the loan that is owed on it. This can be difficult for some families.
- People who will eventually move in with their adult children. This is due to the same reason as the nursing home issue although it is significantly less of a problem. For one thing, you can generally plan better for this situation. Moreover, there are options which include having the adult children move into your home instead of vice versa which will mitigate the problems here.
- People with multiple residences. You can only get a reverse mortgage loan on your primary residence so you'll need to work with a financial advisor to determine which loans are appropriate and which are not.
Despite these considerations, people within these groups may ultimately find that the reverse mortgage loan is the best choice for them. This is particularly true in the current housing economy. But it's certainly something to think about before signing on that loan.
Question of the Day: Which group of people is most impacted by the stipulation on the reverse mortgage loan that you must live in the home in order to get and keep the loan?
