Seniors Who Need Debt Help: Are Reverse Mortgage Loans The Answer?

May 2008

We've heard about the millions of American families struggling to keep their homes in the collapse of the subprime market; but what many people don't know is that there are a lot of American seniors out there struggling to make ends meet, who also need debt help in order to save their homes and pay their bills.

Are reverse mortgage loans the answer?

The AARP has warned that seniors are particularly susceptible to the marketing pitches of subprime lenders, even when they could qualify for better loans. As a result of this unscrupulous lending, alongside rising costs for basic living expenses like food, gas, and utilities, many seniors are in need of debt help if they are to keep their homes.

Reverse mortgage loans can help some of these men and women, but the truth is that this type of lending is very specific. Reverse mortgage loans are loans or funds given to older Americans who are "equity-rich," meaning they own property that's worth money. The bank pays this person - who typically has to be 62 years or older – that money either in a lump sum or on a monthly basis until that person either sells the home or passes on. At that point, the bank must be paid back (with interest) for the money that was lent.

The amount that one can borrow through reverse mortgage loans depends on the owner's age, the current interest rate, loan fees, and the appraised value of the home or property.

It's very important that seniors who seek this type of debt help are careful not to be taken advantage of when it comes to the appraisal of their property, loan fees, and interest rates. Reverse mortgage brokers can be just as unscrupulous as any other lender when it comes to finances.

For those seniors who are in debt but don't qualify for a reverse mortgage, there are other forms of debt help available, including credit counseling by qualified professionals. However, consolidation loans and similar practices must be reviewed with great care to make sure that seniors are getting the best deals available to them.