Reverse mortgages can be useful—and they’re overcoming a bad reputation, according to a recent article published by Chron.com, the online outlet for the Houston Chronicle.
Between paying off an existing mortgage, paying for unforeseen medical costs or in-home care, or simply helping to offset shortfall associated with retirement planning, reverse mortgages are offering an option to qualifying seniors, the article notes.
Financial planners, too, are coming around to the concept.
“Years past, financial planners didn’t view reverse mortgages as a planning tool,” David Johnson, associate professor of finance at the University of Wisconsin-Superior, tells the news outlet. “It was viewed as a last resort and they assumed that the only people that do reverse mortgages are people that are desperate. Clearly that’s not the case, and I think they are starting to view it differently now.”
The article cites one example of an older homeowner who took out a reverse mortgage but didn’t access the proceeds until she faced a fall and subsequent in-home recovery. Her children were in support of the decision.
The costs are worth noting, but are not unlike any other mortgage costs, National Reverse Mortgage Lenders Association President and CEO Peter Bell tells the publication.
“It’s still going to be accruing interest on the house the same way as a conventional mortgage,” he said. “The question is whether you are going to be making those monthly payments now or let that be paid off later.”
Written by Elizabeth Ecker