Although reverse mortgages are becoming more popular amongst senior citizens, a number of major banks are ending their programs. Social security and retirement benefits are just not what they used to be, so independent homeowners above the age of 65 are doing whatever they have to in order to maintain their lifestyles. While reverse mortgages are not all bad, there are several areas in which both homeowners and lenders can miss out. Some companies promise to make payments until the elderly person is deceased. Other banks require homeowners to relinquish ownership of their homes once they have tapped into all of their equity.
Essentially, big banks can make more money simply repossessing homes and reselling them in the open market than they can by approving reverse mortgages. One thing is clear – smaller banks and credit unions are able to appeal to their long time customers and make a substantial amount of money by getting into the reverse mortgage industry. Real estate experts believe that there will be three time as many reverse mortgages in 10 years as there are today.
Reverse mortgage are only approved if an applicant is a senior citizen and has equity in his or her home. The monthly payments can be a welcome relief for homeowners that are struggling to pay their bills, but many people don’t read all of the fine print. If a homeowner intends on giving the home to heirs, then it is important that they choose a company that does not require them to sign over the title.
