Reverse Mortgage

Reverse mortgages are loans that the borrowers are not required to repay until they move, sell the house, or die. Based on the equity built up in the house over time, a reverse mortgage can give the borrower money through one of several options: as a lump sum payment, a monthly income, or a combination of both. Although a home equity loan can also provide these options, the borrower runs a risk of losing the house to foreclosure.

These types of mortgages are usually taken on homes owned by people needing to borrow cash from the home's equity to pay for home repairs or property taxes. These homeowners are usually in the moderate to low income bracket. A reverse mortgage may be offered through local, state, or federal government organizations. These offers are generally made to elderly citizens, and their age is a definite factor in the amount of loan available. Another factor, of course, is the value of the home. The elderly generally are more inclined to stay in their homes as opposed to selling and moving; therefore this kind of mortgage is a good option for them.

The age of the borrower and the value of the property will determine the amounts that can be loaned in reverse mortgages. There are various types of mortgages available, and the lender determines the loan amounts based on their policies and regulations. The repayment structure is also determined by the lender. One type, called the Home Equity Conversion Mortgage, is strictly regulated by the Federal Housing Administration. This agency is a division of the federal Housing and Urban Development (HUD) organization. These regulations by the federal authority include the amount of loan costs and also guarantee the lender will meet their obligations to the borrower.

The note is due and payable usually at the time of the homeowner's and all eligible borrowers' deaths. However, other situations can cause the reverse mortgage loan to involuntarily come due, such as moving to another primary residence; allowing the property to deteriorate and failure to try to maintain its acceptable condition; failure to live in the home for more than a year; the borrower's personal mental incapacity to live at home instead of an institution; and failure to pay property taxes or other borrower obligation. Condemnation for being unfit to live in, as well as government claim by imminent domain laws, will also predicate a due and payable loan.

In actuality the need for an elderly person to be in such a needy state that requires a reverse mortgage is a sad testament to how their finances may have been mishandled earlier in life, although this is not always the case. The writer of 2 Corinthians 12:14b notes "for the children ought not to lay up for the parents, but the parents for the children." Financial need in one's old age is sad. However, taking advantage of the home's equity in reverse mortgages is not a sin, and those who have it to use should be grateful.

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