Reverse mortgages are overcoming their bad reputation with new rules and regulations.
Reverse mortgages were created as a tool to ease financial burdens on the elderly and new laws improved them as an option, according to Inforum in “Changes in reverse mortgages make them safer, less expensive.”
A reverse mortgage allows an elderly person to use the equity they have built up in their home. The borrower can get money now as a line of credit, regular payments or even a lump sum. The money does not have to be paid back until the borrower moves out of the house permanently, sells the house or passes away. The lender is paid back the money loaned plus interest by selling the house. If there is anything left after the lender is made whole, the remainder goes to the borrower or his heirs.
Legal protections make these loans better than they used to be, including provisions that borrowers must receive counseling by an approved provider before signing a reverse mortgage.
An elder law attorney can advise you on the reverse mortgage option.
Reference: Inforum (Feb. 27, 2017) “Changes in reverse mortgages make them safer, less expensive.”
For more information on elder law and estate planning, please visit my estate planning website.
