Reverse mortgages, also called home equity conversion, gives cash payments to a home owner, based on the individual’s home equity. Those who choose reverse mortgages can defer loan payment until they move out or die. Deferring loan payments, however, results in loan interest being added to the original mortgage, which may eventually exceed the value of the home.
Controversies concern the difficult nature of comprehending the terms and conditions of the loan. Lack of complete understanding may render seniors vulnerable to misleading information or fraud. Reverse mortgages do have obvious advantages. This strategy allows home owners to maintain residency in their own homes while providing needed funding for costs such as heating, repairs, taxes, and other items.
The Eastern Area Agency on Aging can provide information and counseling. Before moving ahead on this, people are encouraged to seek information about the disadvantages as well as the advantages and about reputable sources for the transaction.