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In the early days of reverse mortgages this was often true but not anymore. Early reverse mortgages often included bad loan terms and unscrupulous companies used reverse mortgages to take advantage of seniors. Thanks to increased regulation and standardization of the industry, reverse mortgages are now a safe and cost effective option for seniors. Fees and interest rates are now regulated and all seniors receive goverment certified counseling to make sure they understand the program. Most loans are also insured by the Federal Housing Administration.
With a reverse mortgage, you retain ownership of the home and a reverse mortgage is the best way for you to remain in your home as long as you are able. Because you don't make any payments, your responsibilities are easy. You are only required to: - Live in the home.
- Pay the property taxes.
- Pay property insurance.
As long as you meet these requirements, it's your home. When you are no longer able to live in the home, you or your family can sell the home or refinance the mortgage. Either way, all of your unused equity goes to you or your estate. All of the unused equity will still go to your estate. Many seniors use their reverse mortgage to begin gifting the equity to their families immediately. If you are on Medicaid or think you will be soon, consult with a Medicaid expert before gifting any assets.
This is a difficult situation that we see too often. You don't want to upset your children but you are also struggling to make ends meet. Some seniors choose to use the reverse mortgage just to refinance an existing mortgage and avoid house payments. Some choose to make a "gift in life". Other seniors prefer that the children not know about the reverse mortgage. Only you can make this decision but don't forget that it's your money. You've worked hard to save it for your golden years. You shouldn't feel guilty about improving your quality of life.
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Financial Services Group
Common Concerns 
