You should always think carefully before making a financial decision, and this is certainly true when it comes to decisions like bankruptcy. However, bankruptcy is not the only decision that has long-term effects. What about something like a reverse mortgage?
Who qualifies for a reverse mortgage? If you are at least 62 years old and have home equity, then you qualify for a reverse mortgage. These are loans that are specifically meant for seniors with home equity.
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.)
If you never repay the loan, the lender will end up with a house. This may not matter to you if you don’t intend on leaving your children or grandchildren with inheritance or if you have no surviving relatives. Otherwise, you should think carefully about this because your heirs could end up with nothing. The other option is to repay the loan before you pass on. Depending on the policy of the lender, your heirs might have the option of paying back the amount you borrow in order to keep the house themselves.
It’s important to get all the information because there are many details you need to be aware of. For example, if you decide to get a reverse mortgage, the government may change your benefits for Social Security or Medicaid. Also, you should never let a lender push you into making a decision that you’re not comfortable with. Always think carefully, and remember that the loan has to be repaid eventually.
Think carefully before putting your house on the line. If your main concern is getting out of debt, it would be wise to at least consider the possibility of bankruptcy. We’re not saying it should be your first choice or that you should jump into it impetuously. However, it may be a better option because you can eliminate your debt without putting your house in jeopardy (unlike the reverse mortgage).
2 Comments
Congratulations! In this one article you, I believe you have managed to get every single fact wrong about reverse mortgages. Perhaps you will allow me to post an article on your Web site about bankruptcy (of which I know next to nothing) and we’ll call it a draw? Do your homework next time before you post erroneous information about a subject.
I notice you don’t say exactly what is incorrect, why would that be? It’s actually pretty accurate as one can find out at HUD.GOV.