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Benefits of Reverse Mortgages for Seniors

Reverse mortgages are an option for seniors who are interested in supplementing their retirement by using their home equity as collateral for a reverse mortgage income loan. For some, the benefits of a reverse mortgage can easily outweigh the costs. Reverse mortgages offer a solution for some but it is important to do your research and discuss options with family members or other trusted advisors.

While there are many benefits of reverse mortgages for certain seniors, the simple truth is that reverse mortgages are not right for everyone. Therefore, if you are considering taking a reverse mortgage loan on your home, it is important to fully understand both the benefits and disadvantages in order to make the choice that is best for your situation.

You can learn more about reverse mortgages for seniors below or by contacting a reverse mortgage consultant at Cobalt Mortgage to discuss if this loan type is a good option for you.

Information about Reverse Mortgages for Seniors

Reverse Mortgage Benefits for Seniors:

  • Quality of Life: A main benefit of a reverse mortgage is that it enables homeowners to access their home equity without making monthly mortgage payments.* This may improve your quality of life by supplementing your monthly budget, allowing you to make repairs or improvements to your home, allowing you to pay for rising medical or living expenses, or any other need you may have. (*You must continue to pay property taxes, homeowners insurance and any homeowner’s dues or maintenance must continue to be paid.)
  • Maintain Ownership of Your Home: An important benefit of reverse mortgages for seniors is that you maintain the title of your home as long as you or the last remaining borrower live there, and meet all other obligations of the mortgage. Once the last remaining reverse mortgage borrower passes or no longer lives in the home as their primary residence, the estate must pay off the mortgage.
  • Flexible Payment Options: Depending on your needs and the product you choose, you can receive the money from your reverse mortgage in one of several ways including all at one time, in fixed monthly payments, as a line of credit, or a combination of these options.
  • Social Security and Medicare Benefits are Not Affected: The loan proceeds that you receive from a reverse mortgage will typically not have any impact on regular Social Security or Medicare benefits. We recommend that you consult a qualified financial advisor or a representative of any specific programs you receive to ensure continuation of your benefits.

Reverse Mortgage Considerations for Seniors:

  • Interest Rates & Fees: One of the disadvantages of reverse mortgages for seniors is that they are still a loan. Therefore, the loan is subject to interest and there are fees and costs that apply. While these costs are often added to the overall balance of the loan and are not due until a maturity event occurs, it is important to realize that they can add up. Additionally, since you do not make a monthly mortgage payment on a reverse mortgage, the mortgage amount you owe grows larger over time. As your mortgage amount increases, the amount of equity remaining in your home may be reduced.
  • Government Benefits That May Be Affected: The monthly payments that you receive from a reverse mortgage will not influence regular Social Security or Medicare benefits. However, if you are receiving Medicaid or other government sponsored programs, your benefits may be affected. We recommend that you consult with a qualified financial advisor or a representative of any specific programs you receive to ensure continuation of your benefits if you choose a reverse mortgage.
  • Lack of Knowledge: The most significant problem with reverse mortgages for seniors is that individuals have an overall lack of knowledge of how a reverse mortgage works and the specific terms and limitations. Anyone considering a reverse mortgage must obtain HUD-approved, independent third-party counseling and consult with a professional reverse mortgage consultant in order to learn more.

Is a Reverse Mortgage Right for You

A reverse mortgage consultant can help you understand how the benefits and costs of reverse mortgages for seniors will apply to your situation.

To speak with a reverse mortgage consultant and learn more, please contact the professionals at Cobalt Mortgage.

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