A Reverse Mortgage: Is It For You?

Many senior citizens do not know where to get the funds to pay for their health care. This may be why the issue of reverse mortgages is getting so much attention in the media. Many senior citizens are unsure of how to get the finances to continue caring for themselves if heath problems arise. The need for long-term health and medical care is getting to be more relevant to our American society. There are larger numbers of people who are reaching retirement age than ever before and they need health care alternatives.

As you read the newspaper or watch television or as you browse the financial websites on investments, the idea of reverse mortgages tends to pop up. Often an attempt is made to explain what the different advantages and disadvantages are to the reverse mortgage. There are two major organizations which have given endorsements to the reverse mortgage option to provide long-term care to seniors in certain circumstances; AARP and the NCOA.

The NCOA (National Council on Aging) conducted a report which stated that over 13 million people are eligible to use a reverse mortgage to fund their long-term expenses at home and to keep their independence at home longer. This is an option that offers an advantage of having alternative financial resources from which to draw funds for medical care. Less money is taken from Medicare and Medicaid, both of which have great financial pressure on them because of the large volume of retirees that rely on them.

A reverse mortgage is also known as a home equity conversion mortgage. Reverse mortgages are supported by federal agencies such as FHA and HUD. People who are sixty two and older are the most frequent users of the reverse mortgage program. These people are usually the ones who have paid their mortgages off and have usable equity in their homes. The amount that the recipient of the reverse mortgage can draw against is usually capped by the value of the house.

Instead of making a monthly mortgage payment the reverse is true, as the homeowner actually receives the payments. The money that is received through a reverse mortgage is tax free and will not affect your current Medicare or SSI benefits. Seniors don't have to worry about the money being taken from their monthly incomes.

In the event that the homeowner does leave the home to move into a nursing facility or a retirement community the reverse mortgage will have to be paid back. This type of loan is based on the equity you have in the home, but even if the payments to you over time amount to more, you only have to pay back what the house is valued at when the mortgage was taken out.

Not everyone will find that a reverse mortgage will be the best way to deal with their circumstances but it is still a very good option for some. As an aging baby-boomer or an older senior citizen you may benefit from this information.