What You Must Know About Reverse Mortgages For Seniors

A reverse morgage, a seemingly simple way for seniors to get a few extra dollars to help you get by, help you pay for your groceries, or for your car payments, or even for that getaway you so desperately deserve. It seems easy and clear. A no drama way to deal with your financial problems, especially in these hard times, no-one has it easy! So the reverse morgage seems like the solution. It seems like the light at the end of the tunnel, but beware! There are pitfalls ahead and if you're not in the know, you could end up owing a lot of money, losing your home, or worse having your children, or spouse or closest relatives pay off the debt when you pass away. Beware the pitfalls of a reverse morgage.

Reverse Mortgages for Seniors

Reverse mortgages for seniors sounds like a great idea, and they are there to help you at that difficult time of life. If your Superannuation isn't looking healthy, or if you are not self funded. Reverse mortgages for seniors can be the answer as they are tax free, you can decide how you want your payment given to you wether it be in a one large payment or a monthly payment, sort of like an income, or set up a line of credit and this won't affect your government payments or you government healthcare.

Reverse morgages for seniors now also come with counselling in the state of California so seniors are well informed and well aware of the decision they're making. There are positives but there are also many negatives associated with the reverse mortgage as it is a very old fashioned way of banking. There are myriads of fees as well as compounded interest for the life of the loan and a set of huge start up fees. So when it comes to closing the mortgage, the mortgage often outweighs the value of the house so borrowers are still left with a debt. Reverse mortgages for seniors also leaves little options for a senior later on in life. Often due to the fees, should a senior decide to move home, or downsize there's often not enough money left after paying off the reverse mortgage. Then there is the fuss of buying a smaller home, forcing the senior to take out another mortgage. Seniors cannot then move home. Even if they need assisted care, and need to move into an assisted care facility often they can't due to the sizable mortgage on the house. They then must hire a part-time or full-time nurse to take care of them, another expense in a myriad of growing expenses that comes with the reverse morgage.

Is There a way I can Calculate My Reverse Morgage?

There is such a thing as a reverse mortgage calculator. It works much the same as a normal mortgage calculator and takes a lot of the guess work out of reverse mortgages. But remember, this reverse mortgage calculator cannot calculate exactly how long the reverse mortgage will last if you don't see yourself moving out. It cannot see into the future and predict passing away and so forth, so the reverse mortgage calculator will really only give you a vague idea of how much you will need to pay back. It may be more if the loan extends longer and it may be less if is cut short early.

It all Sounds a Bit Much. Is there any Other way to be Funded Whilst Still Being a Homeowner?

Yes! There are other options which don't leave you in the same house and out of options, and also don't leave what could be a substantial debt for your family. You may decide to downsize. Downsizing is a great option for seniors as well as a debt free option. Selling the bigger home and buying a unit or a townhouse and living off or investing the leftover money is great way to be debt free and self-funded. This also doesn't affect your pension so can have to two incomes. It is not always tax free however, but does not attract a large tax. Another option is to borrow against your home and give the bank a portion of the future value of the house when it comes to be sold. For example you may borrow thirty thousand dollars and in return the bank will take twenty five per cent of the value of the house when it is sold. So if you do pass away before selling the house you can be certain that your family will be able to repay the debt by selling the property.

It is Your Choice

The reverse mortgage for seniors has its benefits but also its pitfalls. When there are so many other options out there for homeowners, it's worth it to take the time to evaluate your needs and capability to repay the loan. Also it is a good idea to discuss with your family how they will repay the loan should you pass away. Put together a plan for you and your family and protect yourselves and each other.

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