Reverse mortgages have always seemed like a wonderful solution for retirees who need extra income.
In exchange for equity in their homes, seniors could get an annuity. When they pass away the home is sold. After the mortgage is paid off any proceeds left go to the estate.
Nevertheless, elder law attorneys have pointed out that reverse mortgages are in reality not that simple.
Many elders have lost their homes when they were unable to afford all of the terms normally attending reverse mortgages for the remainder of their lives. These include paying all property taxes and insurance.
Recent legal changes could make elder law attorneys more comfortable with reverse mortgages, as reported by the Huffington Post in "New Reverse Mortgage Laws Should Positively Benefit Retirement Planning, Experts Say."
The recent legal changes are not that complicated.
Now, part of the approval process requires that lenders make sure applicants have the ability to pay taxes, insurance and annual upkeep before approving a reverse mortgage. They also make it easier for a surviving spouse to stay in the home if their deceased spouse was the one with his or her name on the mortgage.
Taken together these changes should make elder law attorneys more comfortable with reverse mortgages and make the mortgages a better option for retired people.
However, it is still important that you speak with an elder law attorney before signing a reverse mortgage. Make sure the mortgage you are getting is the right one for you and your family.
Reference: Huffington Post (Jan. 7, 2016) "New Reverse Mortgage Laws Should Positively Benefit Retirement Planning, Experts Say."