Reverse Equity Mortgage, is it for you?
by: by Johanna Shemesh - Student at Michael Krop Senior School

I would like to start this column by giving credit to the Federal Housing administration (FHA) for developing the Reverse Equity Mortgage program. Although the FHA didn't develop the concept, it was their involvement which helped evolve the program to its current status.

There was a day when homeowners found themselves groaning and moaning over having to make mortgage payments. Not with Reverse Equity Mortgages! As a senior it becomes increasingly difficult and annoying to make mortgage payments. It's the last thing any senior looks forward to, especially when the money is missing in action. If seniors don't have enough in their retirement fund to cover expenses and mortgage payments, most senior find themselves having to hit the streets for a job. With the increase in real estate taxes and exorbitant increase in property insurance, selling your home and renting another seems to be an appealing option.

What happens when all the monthly payments empty the bank account? This is when seniors experience the indignity of moving in with their children, and option that robs the dignity from the "senior years."

What a better option than to take a FHA Reverse Mortgage and eliminate mortgage payments. Then, you can generally, depending on the size of the old mortgage, take out cash with the new mortgage or establish an equity line so the money is on "stand-by" if the need arises. Once you are out of the house for one year, depending on various scenarios, the loan becomes due and the mortgage "bill" is left for the kids, who can sell the house and divide the remaining equity when the sale closes.