The reverse mortgage market is poised for a comeback, according to industry sources. Although in recent years, many key players such as Wells Fargo and MetLife have exited the reverse mortgage business; many industry insiders believe it is huge untapped market. As seniors look for ways to raise cash for home repairs, tax payments and debt elimination during retirement, these products may become increasingly popular. ^1,2,3,4

As with any financial products there are pros as well as cons and reverse mortgages are no exception.

Pros of reverse mortgages: ^1,2,3

You can stay in your home for as long as you are able
Reverse mortgages allow you to tap into the equity of your home without selling it
The money doesn’t have to be paid back until the home is sold or the last borrower leaves the home or dies
With tenured payments, you can have income for life

Cons of reverse mortgages: ^1,2,3,4

Borrower must pay compound interest
Closing costs and other fees are expensive compared to purchasing a home
You must pay for mortgage insurance, taxes and homeowners insurance as well as maintain the property otherwise you will be considered in default
An extended nursing home or hospital stay can have you evicted from the home
If you are considered in default, you must pay the money back immediately and face eviction
Only available to borrowers over age 62.

Alternatives to reverse mortgages

Depending upon your financial situation, there are several alternatives to reverse mortgages. For example, if you need money to modify a home for wheelchair access, there are grants and lost cost loans available.⁴ For individuals looking to use the cash for debt elimination, home repair or medical bills there are other avenues to raise cash as well.

If you have an illiquid asset such as structured settlement, annuity, life insurance policy, royalties or even a pension you can sell the rights to a portion of the future payments for a cash lump sum. When you sell your future payments it is not a loan so you do not have to pay the money back. These transactions have no bearing on your home ownership and there is no defaulting. Typically these transactions are far less costly than reverse mortgages, credit cards and other high-cost loans.

If you would like to know more about how you can sell some of your future payments for a cash lump sum, call CBC Settlement Funding now at 877-386-3377

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