A recent article in the San Jose Mercury News highlighted the dangers of reverse mortgages; a loan option available to seniors age 62 and over that allows money to be borrowed against equity in the home. Ideally, reverse mortgages are intended to allow seniors to borrow money which does not have to be repaid until after their death – typically through the sale of the home. This money is often used to pay for medical expenses, boost retirement income, or help relieve the burden of cost associated with long term care.
While reverse mortgages may appear like a reliable option at first glance, for many seniors working with untrustworthy lenders, the loans have a devastating effect. For example, San Jose senior Joan Serioux-Forde was left to foot the $239,000 bill on a reverse mortgage on her home after her husband’s passing. How? She had been convinced not to put her name on the deed to the home by the lender, leaving the reverse mortgage loan due upon her husband’s passing.
Determining if Reverse Mortgage is Right for You:
Reverse mortgages are not always a negative option. For some seniors, they are a great way to boost income in later life. However, it is imperative to ensure that the loan options are right for you. Consider these items:
Age: Older seniors are likely in a better position to apply for a reverse mortgage due to a shorter pay out period.
Financial situation: If you have other income streams available, it’s likely best to use them. However, if you are in need of money to say, repair the home, or help pay for in-home care from a home care company using a home care software or home care system to help manage your long-term care, a reverse mortgage may be the most reasonable choice.
Alternatives: Think about other options to pay for your needs. Do you have retirement accounts or investments that can be accessed? If so, it may be best to exhaust these options first. However, investigating alternatives also means looking at the most cost effective way to live.
Some alternative living options may include reducing monthly expenditures and looking at ways to reduce the cost of long-term care, such as utilizing an in-home care agency equipped with a home care software or home care system to ensure that you can stay in your home for the long term opposed to considering moving to an assisted living facility. Home care, facilitated by an agency with a robust home care software or home care system, such as ClearCare, can also help ensure that you are eligible for a reverse mortgage by providing the care you need to stay in your home.
Making The Decision:
The decision to engage in a reverse mortgage is a major financial undertaking. However, sound financial advice and lifestyle planning, such as choosing to live out your life in your home with the assistance of a home care software or home care system, can help ensure that you make the right choice when it comes to a reverse mortgage.