Predatory lending and the mortgage crises didn't just effect first time home buyers. We saw a number of seniors become prey to fradulent home-equity loans that allowed them to over- finance their home, increase the monthly payment, and leave many destitute trying to figure out if they should pay for groceries, prescription drugs or the mortgage.
Rising numbers of home foreclosures are taking place in Minnesota, as well as nationwide. And the elderly have not been immune from the lure of low initial “teaser” rates of adjustable rate mortgages and other inappropriate home financing programs for those on limited, fixed incomes. A reverse mortgage may help senior homeowners (age 62 and older) who are falling behind in their mortgage payments avoid foreclosure.
An ideal prospect is a senior who has built up a considerable amount of equity in their home and is more recently unable to keep up with mortgage obligations. They may be experiencing financial stress due to rising mortgage payments or any number of unforeseen events such as huge medical expenses, job loss, increased taxes or divorce. Once the homeowner falls behind, the debt load can increase significantly and quickly through fees and dramatically higher interest rates. Thus it is important for the homeowner to look into their options sooner, rather than later.
Unlike a home equity loan or conventional mortgage, a reverse mortgage does not require any repayment as long as the borrower lives in the home. Any existing lien or mortgage must be paid off with the proceeds of the reverse mortgage, and when there is enough equity to do this, the home can be saved from the foreclosure process.
The best course of action is always to first contact the lender to see if a repayment schedule can be worked out. But a reverse mortgage can sometimes save the day, and if you know someone who might be a candidate, please urge them to investigate their options.
I am always available for information, without obligation. Gail can be reached at (952) 544-0821 or firstname.lastname@example.org.
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