Reverse Mortgage Loans Help Seniors Live Comfortably

The government-monitored program allows the elderly to use the equity in their homes for expenses of any type.

SEATTLE – With a housing boom going on in Washington State’s Puget Sound area, there is a large Northwest population that is suffering a housing crisis – senior citizens.

As property taxes rise and prices for average homes and apartments leap out of range for those on fixed incomes, seniors are finding retirement financially difficult.  Most are living on Social Security and small pensions, with no other means of income.  In an area that has produced a multitude of millionaires under age 30, the struggle for affordable senior housing is of paramount concern.  As older Americans, most also face degenerating health, which, combined with the loss of ability to earn a competitive income, forces many down to almost a poverty level existence.

The Seattle area is not alone in the quest for affordable housing for seniors.  The nation as a whole shares the dilemma.  Real Estate Finance Today reported that the Department of Housing and Urban Development (HUD) noted, “more than 4 million senior citizens in the United States are spending more than 30 percent of their income on housing.”  If seniors are spending more than a third of their fixed income on housing, it means they must spend less on other necessities like food, clothing, utilities, home repairs, health care, and car maintenance.  The HUD report also revealed a significant number of seniors live in “residences that do not meet their physical limitations or other assistance needs.”

HUD plans to fund non-profit agencies with nearly $800 million to assist those seniors in need.  But another option they are considering allows elderly homeowners to receive a monthly income from a loan on the equity in their homes.  The expansion of the reverse mortgage program would generate funds from the homeowners themselves, without tapping federal funds.

Reverse mortgages are available to homeowners 62 and older, and they don’t have to repay the loan until the house is sold or passed on. Homeowners can help themselves by using a reverse mortgage to supplement daily living expenses, or anything else the borrower chooses. Some other common uses for the loan include paying off a mortgage or other debts, making house repairs, buying a vehicle or boat, traveling, or investing. Reverse mortgages are backed by the federal government to insure homeowners it is a safe and regulated transaction.

Source: Senior World Online, March 2003

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