Aging in place is often a sought-after retirement outcome for many seniors hoping to avoid leaving their home in older age, but sometimes the costs associated with meeting this goal can be challenging on a fixed income. A reverse mortgage is one of the options a senior can explore to try and make the goal of aging in place a reality, according to a new article from NextAvenue published at MarketWatch.
“[Reverse mortgages get] a bad rap,” said Sonya Edwards, broker and executive director of Branches Real Estate, a subsidiary of the Benjamin Rose Institute on Aging in the article. “But they are not all bad. [Y]ou have to be in the perfect storm to really make a reverse mortgage work.”
The two main reverse mortgage advantages are that the credit requirements are not as stringent as other home equity-based lending instruments, and that reverse mortgages do not require monthly payments toward the loan balance, the article says.
“But because interest is added to the loan each month — and homeowners are not making payments — the balance on reverse mortgages grows over time,” it says. “When the last borrower who signed up for the reverse mortgage dies or moves out of the home, the loan becomes due.”
The complexity of a reverse mortgage can often be off-putting for a senior who explores the option, but that does not mean it should be entirely ruled out as long as the senior who is seeking it out is given the appropriate information relevant to his or her situation, the article says.
“Reverse mortgages are complex and complicated,” Edwards tells NextAvenue. “I recommend talking to an experienced housing counselor before going down that road.”
There are other potential adjacent benefits which might be available to a reverse mortgage borrower, as well, according to the article.
“Older adults may also be able to take advantage of specialized programs designed to cover the cost of home modifications,” it reads. “Many states and municipalities, for example, offer grants and low-cost loans to make homes age-friendly and some organizations provide funds for veterans to adapt their homes at no cost.”
Read the article at MarketWatch.