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You do not need to own your home free and clear to get a reverse
mortgage. The proceeds of the reverse mortgage can be
used for any purpose, including paying off the current
mortgage and any other liens on the property.
One of the more common reasons to obtain a reverse mortgage
is to improve the homeowners monthly finances by eliminating
the mortgage payment. By replacing the current mortgage
with a reverse mortgage the senior does not have to make that
monthly payment and can keep more of their monthly income
available for other needs. We recently help a client go from
living on $300 month after housing expenses to having over
$2,400 to live on monthly simply by paying off the existing
mortgage plus providing a monthly income from the new
reverse mortgage.
The proceeds from a reverse mortgage are generally tax free
(talk with your tax consultant) and can be a lump sum, monthly
income, an equity line, or any combination that best fits your
needs.