Throughout our lives we struggle to make their ends meet. Sometimes we have desires that can’t be supplemented with the income and in those cases we take help of various debt products – e.g. loan for buying a car, loan for vacation, loan for a house, medical loan, etc. But as one crosses the retirement age, repaying the remaining debt becomes tough as the income goes down while the payouts remain same or even increase (due to healthcare requirements). In many cases, paying such debt leaves little money for meeting daily expenses of elderly as most of the income earned will be used to repay the debts.
How Reverse Mortgage Can Help in Paying Debt
This is where reverse mortgage can be a way out of this troubled situation. Here is a case (based on a real situation) that describes the above situation and how reverse mortgage helped.
Rosa Boyd (84yrs) has worked as a housekeeper for the past 24years. She had a debt to be repaid with most of the income earned every month. She couldn’t supplement her living expenses with the income earned. She wanted to clear off the debts so that her daily expenses can be met. Her employer obtained information on reverse mortgage to help Rosa clear her debts and get some supplement income. Ms. Rosa didn’t know anything about reverse mortgage, but she completely trusted her employer. So she applied for the loan and obtained it.
Ms. Rosa used the money obtained to pay off two mortgages totalling $10,855 and $15,000 in credit card debt. Some part of the money was used for necessary repairs to her house. After clearing the debts and making necessary repairs she was left with $3,500 line of credit, plus an extra $100 as monthly supplement income for the next 10years.
Ms. Rosa is happy now that her debts were paid off and don’t have to make any monthly mortgage payments.
If most of the income earned is used to pay for mortgages and is not enough to supplement daily expenses, you might be willing to clear off your debts. At this point of time, reverse mortgage can help you to pay debts and have some monthly income to supplement expenses.
As it is true with any financial product – it is very important to understand reverse mortgage thoroughly before opting for it. Please refer to other relevant links on our regarding reverse mortgage and elder home modification tips.