Just like any other commercial activity performed by humans, like going daily to attend to office work, the primary motive behind a reverse mortgage is also money. Money is the crux and the basis for which senior home owners take up reverse mortgages. It is on this same motive that the reverse mortgage lenders are also lending the money, in the hope that eventually the reverse mortgage property can be sold to get the money back. There are also closing costs and origination fees charged by reverse mortgage lenders which are deducted from the moneys obtainable through a reverse mortgage.
The seniors seeking reverse mortgage have an easily understandable psychology – they want the greatest amount of money in the shortest possible time. Not that anything is wrong with that, as it is their property and their money. But when they take such decisions without consulting with their children and heirs, then problem situations can arise. That is why it is advisable to make sure that the heirs/children have enough funds on their own, and houses of their own, and they would not need the property which is being reverse mortgaged to the lender.
Some senior home owners feel pushed by reverse mortgage lenders into taking up a reverse mortgage which they think is not something in their best interests. That is why the Federal Government has made the requirement for obtaining counseling as mandatory, before taking a reverse mortgage on a property. During the counseling, everything is explained and doubts are clarified by a certified reverse mortgage counselor, as per the rules of the FHA (Federal Housing Administration) and the HUD (Department of Housing and Urban Development).
Seniors use the reverse mortgage moneys in any way they wish, and the money is not taxable because it is considered part of the home equity. Seniors are known to use the money for purposes like home repairs, educational expenses of grand-children, taking a dream vacation, meeting the costs of long term health care, etc.
Now that you know the above, see if you can figure out the reason why Panama City, Florida has one of the highest reverse mortgage origination rates in the country.