Reverse Mortgages For Senior Citizens

By Lee Beattie | January 31, 2010 | Popularity: unranked (?)

If you are a senior and have trouble living on your fixed income then you may need to think of utilizing a reverse mortgage to help with the ever rising cost of living. If you are like nearly all people living on a fixed income because the prices of food and gas are making it increasingly problematic to enjoy the life style you planned for during your retirement. Many are considering getting a part time job to help with cost but this can have a negative impact on your social security income and your tax returns as you may wind up owing taxes at the end of the year.

With reverse mortgages nonetheless you can attain access to extra money and it will not negatively touch on your actual financial situation. This type of mortgage is easy to qualify for and can help get you back to living in the style you had hoped for. Many consumers wonder what the difference between a reverse mortgage or a home equity loan is here is how each works:

Reverse mortgages, simply put, permit you to exercise the equity that you possess in your home without expecting to make monthly payments. A home equity line of credit also presents you access to your equity; all the same you will need to make payments every month on the sum that you borrow.

There are other factors that you should also consider. For example with a home equity line of credit you need to show proof of income to your lender in order to qualify whereas with the reverse mortgage you do not need to as the lenders will get their money back when you or any one on the deed are no longer living in the home.

So, do you qualify for this type of loan? There are only a a couple of qualifications that you must meet to be eligible. First, you and everyone on the deed must be at least 62 years old. Next, you must own the property outright or you may have a real small mortgage left on the home. This property must too represent your primary residence and you need to be living there. This is all you need to qualify for this type of loan.

Once you qualify you can receive your money one of several ways. You can receive a lump sum payment, you can prefer to have set monthly payments, or use a line of credit option. The crucial affair to think of with this type of loan is that you will never be tossed out of your home. The lender will wait until everyone on the deed is no longer living in the household to collect their fees, principle and interest.

There are a few negatives that you may also want to consider and those are higher interest rates, and higher fees. Since you are not producing any monthly payments on the loan and the lender may need to hold off years or potential decades to get repaid, they more often than not charge more such interest than some other types of mortgages. The closing fees are also more money than a typical closing maybe.

So if you notice yourself having to really work at it to make ends meet, are at least 62 years old, and own your home, you should consider a reverse mortgage. Having this extra income can help you to retain the same life style and as most analysts will tell you that by the end of 2008 gas prices, on the national average, could be $5 or more a gallon let alone the increase in food prices.

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