For seniors looking to age comfortably with sustainable retirement assets, a reverse mortgage might just be the answer, however, there are several areas to consider before applying for the home equity-tapping loan, writes USA Today.
Fielding a question on the Federal Housing Administration’s (FHA) Home Equity Conversion Mortgage (HECM) program, USA Today’s Money Watch column breaks down whether a reverse mortgage is the right path to a comfortable retirement.
Most heading into retirement do not have adequate assets—or comparable care insurance—to offset the costs of a long-term health care event not covered by Medicare (and there are many).
Therefore, the equity in their home is often the “ticket” into a comfortable independent, assisted or nursing care facility.
The vast majority of outstanding reverse mortgages are indeed HECMs, and this is because they are insured by the FHA.
This insurance guarantees that you will receive the payments—without risk of the default of a private lender—and that the borrower will be able to stay in the home even if the mortgage payments exceed the value of the home at a later time.
The article also urges prospective borrowers to weigh third-party advice and proceed cautiously when considering a reverse mortgage.
Written by Jason Oliva