Mortgage buy down Programs and Reverse Mortgages

Many retirees today find themselves in the uncomfortable position of not having enough retirement income to meet their monthly expenses. Many pension plans are not indexed to inflation, so the monthly pension check may buy less and less each year until it is virtually worthless. Likewise, most people are unable to save a significant amount of money while they are working, and therefore they find themselves with little or no nest egg to provide them with additional retirement income.

Many of these retirees focused on purchasing and paying off their primary residence while they were at work. They may now find themselves with a fully paid for home but few other assets. Fortunately for these retirees, there are programs that can help them take advantage of the equity they have built in their homes to provide themselves with some additional income to meet their monthly living expenses.

These types of programs are popularly referred to as mortgage buy down programs. They are also sometimes called reverse mortgages. In a mortgage buy down program, the agency sponsoring the buy down will pay the homeowner a mutually agreed upon monthly payment in exchange for them taking title on the home.

Most of these mortgage buy down programs will contain some sort of protection that protects the home owner from being put out on the street. This protection generally takes the form of the holder of the reverse mortgage not taking physical ownership of the property while the original owner of the home is still alive. This protection is a very important part of the mortgage buy down program concept.

Before considering a mortgage buy down program, it is important to consider other options as well. Many owners of homes with a high value prefer to sell that home and move down to a smaller, less expensive home. They can then use the difference between what they get for the large home and what they pay for the new, smaller home to meet their living expenses. The advantage of this approach is that they still have a home of their own at the end of the day and have an asset to pass on to their children or grandchildren.

For many people, however, the mortgage buy down program makes a lot of sense. If you think a reverse mortgage or mortgage buy down makes sense for you, be sure to shop around at several different agencies to be sure you get the best deal. As with any major financial decision, shopping around will make sure you get an offer you can live with.