Reverse Mortgage: An Antidote To Foreclosure

8/08/2008

posted by N. Sioris

Stumble It!

As was pointed out an an earlier post this week, AARP released findings about the alarming increase in the number of older Americans that have been forced into bankruptcy for various reasons. Along the same theme, home foreclosures have soared to record levels across the nation.

Senior homeowners that have substantial equity in their homes, but are finding that they are falling behind on mortgage payments, need to grasp the concept that a reverse mortgage can actually be used to save a home from foreclosure. Many homes on the brink of foreclosure have been saved by homeowners refinancing out of a traditional forward mortgage that was in default, by paying off the original lender through the proceeds from a reverse mortgage loan.

Here a couple of news stories about how folks saved their homes from foreclosure by getting a reverse mortgage just in the nick of time: Mrs. Ruby's Victory
and: One Borrower's Return From Edge of Foreclosure

The terms of a reverse mortgage require that all existing mortgage liens be paid off with the reverse mortgage proceeds. After paying off the existing mortgage that is in default, if there are additional funds left from the reverse mortgage, the borrower then has access to the extra funds through a line of credit, a lump sum, monthly supplemental income, or a combination of these.

Since the reverse mortgage loan does not require any future monthly mortgage payments for as long as the homeowners live in the home, there is never any danger of falling behind on payments again or being forced into foreclosure.

A Reverse Mortgage can actually be considered an antidote to foreclosure.