RICHMOND, VA (WWBT) - When looking for financial security, many seniors turn to a reverse mortgage. For those struggling financially, it's a loan that can help them stay in their homes and get their hands on money needed for retirement. But is it right for you?
If you're 62 or older you could qualify for the loan. Housing Counselor, Abigail George, with House Opportunities Made Equal, says there's a reason for all the commercials. "There are lots of people that are looking to do something for their future, for their retirement and many lenders are taking advantage of that opportunity," she explains.
If you're wondering if a reverse mortgage is right for you, George says, no two stories are alike and it will all depend on your situation. "They paid off their mortgages they just want to take vacations. There are people who have mortgages they want to get rid of, they have other debt. There are some people facing foreclosure and they have to do something quickly," she says. George advises, before you make a decision, get help from a HUD approved housing counselor. For those interested, she says there are the typical concerns.
"What will happen if I die? Will my children be left with this debt and will it affect their credit? What if I have a Will and I have already left this to the children? Are they able to retain the home?," she explains.
Keep in mind, as long as you are alive and live in the home, you don't have to repay the loan. But someone will have to take on the debt when you die or the bank can take the home. Other things that will keep you out of trouble; you must continue to pay taxes, utilities and insurance. "You need to understand that this is a loan. It's a loan that you don't have to pay back until you move, sell or die but it is a loan. It's not free money," George warns.
Remember, crooks are always on the prowl, housing counselors say your safest option is to get a reverse mortgage offered by HUD and insured by the Federal Government. Also, be cautious of random calls offering reverse mortgages. George advises that you get a name and do your research.
Here are some other tips: Explore all your options, there may be a less expensive programs. Understand the risks, if you don't follow certain guidelines you could lose your home. And seek advice, the process can be complicated and financial counseling is required for those applying for a federally insured reverse mortgage.
Seniors should also keep in mind that payments from a reverse mortgage may affect their eligibility for assistance from some government programs.
Here are some helpful websites: