The reason I’m writing this article is I’m getting many questions from my customers asking me if this is the reverse mortgage is the right answer for them.

The truth is the reverse mortgage is not a great decision for all borrowers. Situations are unique and they must be evaluated individually.

I have a few borrowers with a bunch of money in savings but the majority have next to nothing and are looking for financial answers.

The typical MO of my customer is a fixed income through SS or retirement. A few are still working but looking to be done with that.

One of my big concerns for these folks is they will have the money available later on in the just in case scenario of a huge financial issue.

Every day of our lives we roll the dice. Sometimes it comes up snake eyes and we must be there to answer the call.

I know most of these folks will be getting the reverse mortgage with me. I simply advise that the funds are used in a prudent manner. Increased disposable income tends to get spent.

The reason being is the house is going to be the biggest store of cash for any of these individuals. If that is floundered away they could be in a real bind later on when something big comes along.

The point here is to use it as a last resort. If it is possible to keep making mortgage payments on a current mortgage it may be best to keep doing so and wait to pay it off with a reverse mortgage.

For those without mortgages who want to use the reverse as supplemental income I advise using the line of credit option. This option allows the borrower to take out money as needed and interest only accrues on used moneys.

A real benefit of this LOC is it actually grows over time and benefits the borrowers. Any unused money in the LOC gains interest for the borrowers favor.

There is no doubt the reverse mortgage serves a great financial purpose. However, it should be used with the utmost care.

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Using the Reverse Mortgage With Care

Just like anything else, before signing for reverse mortgages it is important to understand exactly how the program works, who it will benefit more, and what your long term plans were with your home and its equity when you pass on. It can be an awful thing to think about, but when considering reverse mortgages, it is important to take everything into consideration. This may be something that you would want a lawyer or even a family member to look over with you, as they may be able to point something out about reverse mortgages that you did not even think of.

How It Works

Reverse mortgages are loans or mortgages against your home that you do not have to repay in monthly installments, for as long as you live there. But the debt is still owed to the company and you are not getting something for nothing when dealing with reverse mortgages. If you have equity in your house, you are able to borrow cash and use it for whatever you see fit. The ways that reverse mortgages can pay out to the borrows are through one lump sum payment of cash, through a cash advance that is spread out over months, and as a credit line sort of account that you can pull money from whenever you feel that you need it.

Now, remember I mentioned you don’t get something for nothing? Even though you do not have to make any monthly installments back to the bank while you live in the home, if you ever die, permanently move out, or sell your home, you are required to pay them back the money you borrowed plus some. In most cases, the owners are required to be at least sixty-two years of age or older to be eligible for reverse mortgages. For some people, this is their only chance at taking the equity in their home and living the good life, as a lot of people in their retirement years are not able to afford any more monthly expenses.

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Understanding Reverse Mortgages