Reverse Mortgages & Other Bruises

Reverse mortgages are a way that old people without cash can get some money.

They can tap into their home equity and get tax-free money.

The lender pays the owner every month or in one big sum etc…

When is this money paid back? When the house is sold.

But what if the old geezer lives longer than expected and he gets tossed from his home?

That can be awkward.

What are alternatives to reverse mortgages?

Here's a report:

No payments are due while the reverse mortgage is outstanding. It is repaid when the borrower (or, in the case of couples, the last remaining spouse) dies, sells the house or no longer occupies it as a principal residence.

The borrower can never owe more than the house is worth, no matter when he or she gives it up or whether its value has gone down. If the owner dies and the place sells for more than what is owed on the loan, the excess (after sales commissions and other selling expenses, of course) goes to the borrower's heirs or estate.

The knock on reverse mortgages is that they are expensive. But some state and local governments offer less costly versions called deferred payment loans. Generally, there are no origination fees, and insurance premiums and closing costs, if any, are very low.

The rate on these loans is low as well, if interest is charged at all. When charged, it is often on a fixed basis, meaning the rate never changes. Better yet, many programs charge simple, rather than compound, so interest isn't charged on interest. Some even forgive part or all of the loan if the borrower remains in the house for a specified period.

Typically, seniors can only use deferred payment loans to make specific types of repairs or home improvements such as roofing and heating. But many will cover accessibility modifications such as ramps, rails and grab bars, and energy-efficiency improvements, including storm windows, insulation and weatherstripping.

These loans aren't available everywhere, and eligibility rules vary. Most are limited to homeowners with low or moderate incomes. And many place a limit on the home's value. Some have minimum-age or disability requirements.

Deferred payment loans go by many different names, so they may be difficult to find. Contact your city or county housing department, area agency or county office on aging, or the nearest community action or community development agency. Also try your state housing finance agency.