Benefits of Reverse Mortgages
In his June 28 Housing Counsel column, Benny L. Kass referred to reverse mortgages as a last resort.
Why a last resort? Most reverse mortgages are insured by the Federal Housing Administration, can be paid off at any time with no penalty and, in fact, can be treated like any other mortgage. You may make payments on a reverse mortgage to keep the balance down or pay off the growing interest during the loan without penalty. Generally, the interest rate on a reverse mortgage is also considerably lower than the interest rate on a home equity loan.
Unlike the loan options that Mr. Kass preferred, a reverse mortgage does not result in foreclosure if the borrower decides not to make any mortgage payments. If the reverse mortgage includes a line of credit, no interest is charged until the borrower takes the funds. Reverse mortgages also require no credit check and carry no income restrictions, and if a few logical requirements are followed, the borrower can can stay in his or her home for life.
Mr. Kass's other loan suggestions all require monthly payments; research tells us that many retired seniors are on fixed incomes and should not increase their monthly expenditures. Comparing financial programs always requires serious thought, but to say that a reverse mortgage should be considered only as a last resort? In many cases, it should be the first option.
The writers are reverse-mortgage specialists for Retirement Life Funding LLC, a Sykesville company that markets such mortgages in Maryland, Virginia and the District.