WLBT 3 - Jackson, MS: Is a Reverse Mortgage Right for You?

Is a Reverse Mortgage Right for You?

By Roslyn Anderson
roslyn@wlbt.net

Many seniors are living longer and looking at the equity in their homes as a way to pay for the escalating cost of living.

A reverse mortgage is one option.

Ursula Thompson is a homeownership coordinator with the Mississippi Housing Partnership. She counsels seniors and others on all aspects of home ownership, as well as reverse-mortgage requirements.

"What you're actually doing is putting your home up for collateral," she said. 

The home ownership coordinator said the loan against your home doesn't have to be repaid as long as you live there, but there are stipulations.

"You have to repay the amount you borrow, plus all the up-front costs that are rolled into the loan, plus the interest that has accrued," she explained. "So if your family is intending to keep that home, all of that money will have to be paid back."

A completed counseling form proving that you've been through the process is required and must be taken to your lender.

Here are some tips:

• Involve and inform a trusted person in the process.
• Choose a reputable counselor so that you have a clear understanding.
• Give the decision long consideration.
• Find the best interest rate, and choose a trusted and established lender -- which could be your bank or mortgage company.

Requests have doubled for reverse mortgage counseling at the non-profit agency.

"We actually can go into the system and run some numbers based on some estimated appraised value, if they have anything that they owe on the home and also depending on their age," Thompson said. "We can actually show them in black and white some estimated figures based on interest rates."

The loan is due and payable at the death of the last remaining borrower, however the estate/heirs are given ample time to sell the home or come up with financing to pay off the loan. 

The Mississippi Housing Partnership also recommends the AARP website (www.aarp.org) as an excellent source of information on reverse mortgages. The organization also offers a pamphlet entitled Home Made Money.