Last year when I began writing this blog I talked about reverse mortgages. Recently I read a story that I felt was worth sharing about even here regarding reverse mortgages. Before I elaborate on that story let's go back and recap who qualifies for a reverse mortgage. First, the borrower must be 62 years or age or older. If you are not this age or older, you do not qualify for a HUD reverse mortgage. I would say move on to find other options for your particular situation. Second, you have to own your home outright or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan. Does this make sense at this point? Third, you must live in the home. Fourth requirement which notice I did not say optional is that you receive consumer information from HUD-approved counseling sources prior to obtaining the loan.

According to a new study released by AARP's Public Policy Institute, few seniors are choosing to take advantage of reverse mortgages. The AARP report, based in part on its 2006 national survey of reverse mortgage shoppers, found that seniors interested in a reverse mortgage were more likely to do so for reasons of necessity (48 percent) than for money to provide "extras" (38 percent). "When asked to name the 'main reason' for looking into a reverse mortgage and the 'main use' for the loan proceeds, borrowers most frequently mentioned paying off existing mortgages," the AARP said. Just as I shared before it seems that most would look into to meet health care and disability cost. When our parents get elderly and their health begins to change, you might be surprised that they need some additional income to pay for their medicine or other health needs. I can understand how they would look into a reverse mortgage.

So why aren't seniors giving it two thumbs up and applying. One of the reasons cited most often was high costs. The AARP noted, adding that 69 percent of borrowers surveyed also said the costs incurred to obtain an FHA-insured reverse mortgage were high. Ask yourself, how many times have you walked away from a loan of any sort because the costs were too high. Let's face it when you are dealing with a home loan there are fees - i.e. origination, appraisal, standard closing costs and more. By the time the seniors pay for all of that, they would have incurred more costs that they were not ready for. What could they have applied that money towards and continued to do what they were already doing before they entertained applying for a reverse mortgage.

I was recently with my mom for a period of time and I know that a reverse mortgage is not one of the things I had even thought about with her. I am sure it is not something she has ever thought about as well. She and I are of the same mindset and look forward to paying that last mortgage payment and owning the house, not begin incurring costs in her retirement time.

I recommend any senior do your research and homework before going into a reverse mortgage. Make sure it is the appropriate option for you.

Dr. Taffy Wagner

Post from: FHA Mortgage Center Blog

Reverse Mortgages are not receiving Two Thumbs Up from Seniors

Read more ... http://fhamortgagecenter.com/fha-blog/reverse-mortgages-are-not-receiving-two-thumbs-up-from-seniors/.