Summer Campbell - Kern Valley Sun

Local residents gathered at the Kernville Chamber of Commerce Jan. 16 to learn more about reverse mortgages. The Prince Financial Corporation representative, Barbara Prince, Bankers First representative Rylan Rozell and Patty Nash of McKenzie and Nielsen provided those in attendance with large packets of information on the ins and outs of reverse mortgages including the negative aspects of entering into a reverse mortgage. The purpose of the presentation was to educate as well as provide financial opportunities for seniors.

According to the Reverse Mortgage Page website over 50,000 Americans applied for reverse mortgages in 2006. A reverse mortgage is a way to borrow against the equity in your home rather than a forward mortgage where you are attempting to purchase a home and build home equity by making mortgage payments.

Barbara Prince, left, of Prince Financial Corp. and Rylan Rozell of Bankers First explain reverse mortgages at the Kernville Chamber of Commerce Jan. 16.

Reverse mortgages are generally only available for homeowners 62 years and older, and are designed to be a means of giving older homeowners a way to maintain financial independence, pay large medical bills, repair and remodel ones home, or it can serve as supplemental income.

According to the American Association of Retired Persons reverse mortgages allow a person to borrow against the home equity that has accumulated while they make payments on their mortgage. When people purchase a home, they usually make a small down payment and then borrow the remainder of the funds needed to purchase the home. As home buyers repay their home loans and property values increase, their debt decreases and equity increases.

While reverse mortgages can be a great option for some seniors, they also have the potential to be financially detrimental to seniors who enter into reverse mortgages without fully understanding the fees and restrictions that accompany any type of mortgage or financial commitment. The Department of Real Estate recommends in their Reverse Mortgage informational packet that all homeowners considering reverse mortgages should seek real estate counseling or financial planning services previous to applying. To contact U.S. Department of Housing and Urban Development (HUD) approved reverse mortgage counselors call (800)569-4287 or visit the HUD website at www.hud.gov.