There is a relatively new financial tool available to seniors called a reverse mortgage. Many still have questions about what it can or cannot do.
If you take out a reverse mortgage, most lenders will only give you a bit more than half the equity you have in your home. Still, some seniors are worried about what happens to the property when they pass.
"Say the homeowner lives for another ten, 15 years - the value that it's at now, most likely will grow - keeping our fingers crossed. So that when our borrowers finally pass away, that home will be worth a lot more than it is today," said Rosanne Agustin, Central Pacific Bank mortgage specialist.
There may come a time when the seniors want to pass on their home to their heirs in an unencumbered fashion. There are ways to do that.
"Finding out if they have certain assets which they can use to pay off the reverse mortgage such as life insurance proceeds, investments, savings and if they don't have that kind of thing we can certainly suggest that they try setting that up or even suggest that they make a monthly payment to at least cover that interest," Agustin said.
Whatever decision seniors decide to make with regard to their home, Agustin says it's vital that every one is consulted.
"As much as possible we like to get the families involved just so they know what's going on. It's important for our seniors to take advice from people that they trust and so we like to get the families involved," Agustin said.
The biggest myth surrounding reverse mortgages, according to Agustin, is that the lender owns your house.
"Our homeowner always retains title and ownership to the home. They can sell at any time, they can re-finance at any time. Another benefit is they do have access to that income in case they need it," Agustin said.
