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Reverse Mortgages…Are they a good idea or a bad idea for seniors?? 

By Gerald DuPaw S, Reverse Mortgage Specialist, Home State Bank of Crystal Lake

This is the question I am asked on a daily basis. Just like any other financial product, it can always be abused or misused. The HUD insured HECM Reverse Mortgage (Home Equity Conversion Mortgage) is an excellent product, not only helping seniors in these tough financial times, but it is an excellent safety net for seniors to help maintain equity in their home going forward. 

Homes today are selling for what they were worth 10 years ago!! All the equity a senior may have been counting on over the past 10 years has evaporated in just a few short years. Many experts are saying, “Just wait, it will return in time”. But, will it take another 10 years? Reverse Mortgages, unlike home equity lines of credit, if used properly and prudentially, can help a senior protect the remaining equity in their home though the use the Reverse Mortgage’s line of credit with its potential for growth. Reverse Mortgage lines of credit, if unused, will grow and could potentially grow to actually be worth more than the value of the senior’s home. A Reverse Mortgage can actually save a senior from losing their home to foreclosure if they have sufficient equity in their home. 

There are new changes on the horizon with this loan which will address the issue of higher closing costs over conventional mortgages. More seniors are looking into the Reverse Mortgage option due to some popular features that are built into Reverse Mortgages that can greatly benefit seniors. You will need to advice of a Reverse Mortgage expert to review these options with you and your family. A HUD designed Reverse Mortgage calculator is used to calculate a senior’s benefit. 

So YES, Reverse Mortgages are very good loans for seniors. Reverse Mortgages are a great option for seniors experiencing current financial hardships and for financially savvy seniors looking for options for protecting the equity in their homes or looking for a way to buy a second home (or even a move into a senior community). The senior can live the rest of their lives with no principal and interest payments on either home. As always, beware! There are bad apples in every industry. You must deal with professionals that know the product inside and out and would be willing to tell you NO when it is not in your best interest to do this type of loan.

If you any questions on how a Reverse Mortgage could fit into your lifestyle visit us at Home State Bank in Crystal Lake or call 815-788-7865 and ask for me, Gerald DuPaw Sr, Reverse Mortgage expert.

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