As one of five options to help older Americans avoid foreclosure, U.S. News and World Report wrote about reverse mortgages this week.
Don’t panic, shrink expenses with the help of a housing counselor, look into refinancing and short sales are noted, in addition to exploring the use of a reverse mortgage.
U.S. News and World writes:
“Consider a reverse mortgage. People older than 62 often qualify for a reverse mortgage. With a reverse mortgage, you receive money from your lender and generally don’t have to pay it back for as long as you live in your home. The loan, plus accrued interest, is repaid when you die, sell your home, or when your home is no longer your primary residence. The proceeds of a reverse mortgage are generally tax-free, and many reverse mortgages have no income restrictions.
However, a significant downside of reverse mortgages is that they come with high closing costs, which often exceed the closing costs of a standard home purchase. As such, they can substantially reduce the value of your home. Nonetheless, this may still be a good option for older Americans who have maintained a substantial amount of equity in their home, says Linda Fisher, a law professor at Seton Hall University who specializes in foreclosures. Fisher recommends talking to a HUD-approved housing counselor or a reverse mortgage counselor. A reverse-mortgage counselor may charge up to $125, but Fisher says it’s a “minimal expense” for being able to keep your home.”
Written by Elizabeth Ecker