Reverse Mortgages – A Good Thing For Seniors

May 4th, 2008 @ 4:21 PM by Alden Smith

Probably about the only thing that isn’t getting hit by the mortgage mess is reverse mortgages backed by the FHA.  And especially the Home Equity Conversion Mortgage, or HECM.  It is a pretty good thing, too, because the news is always featuring some older person, retired and living on a fixed income, that has been able to pay the bills and live because of these mortgages.  The best thing I see about these mortgages is the fact that regardless of home value dropping or not, the owner is covered by the FHA backed insurance that is paid for at the closing table.  If the loan balance exceeds the property value, you still get a monthly check for life if that is how it is set up.  A very good thing for people who have worked hard all their lives and put substantial amounts of money into their equity, and then live on a fixed income.

In case people wonder about the finer points of an HECM, here are a few facts.  If you outlive the loan, the lender cannot take control of your property.  They own no part of your home as long as you keep up with the property taxes, maintain the home, and you or your spouse choose to live there.  The lender cannot force your heirs to sell your property.  If they choose to keep the home, they refinance and pay off the outstanding balance.  It is almost always cheaper than buying a home worth what yours is.

Probably the best thing about this type of mortgage is the fact that they proceeds are not taxable, and cannot be used against your Social Security or Medicare benefits.

It is always good to see good news in the market at this time.  Especially when it concerns older seniors that live on a fixed income.  Now, if they just straighten out the sub prime mess, we will be sitting pretty.

One Response to “Reverse Mortgages – A Good Thing For Seniors”

1. Rose Byrne says:

   January 25, 2012 at 6:33 pm

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