Reverse Mortgages For Seniors – What Are They They? Are They Worthwhile?
In a time of financial insecurity, reverse mortgages for seniors can provide some relief for an age group who are often living on a fixed income.
They can represent an ideal solution, and many people have already taken advantage of the benefits that they offer. That’s not to say that they are right for everyone though, which is why it is important to research the ins and outs of them before making a decision.
So, what is a reverse mortgage? Well, it is a type of home equity loan that requires no repayments until either the property is sold, the homeowner no longer uses the property as their permanent residence, or the homeowner dies.
They are generally easily obtainable for senior citizens, since the eligibility process does not consider the homeowners income or any credit scores.
There are some non negotiable stipulations though, including…
- The homeowner must be at least 62 years of age
- The house must be either paid in full or with just a small balance left on the mortgage
- Insurance and taxes must continued to be paid by the homeowner
- The homeowner must attend a counseling session to ensure that they completely understand the reverse mortgage process
The method behind a reverse mortgage is simple. The homeowner is given a loan based on the equity in their home. The amount of the loan is dependent on the value of the home and the level of equity.
This loan can be had in a single lump payment or as a series of monthly payments; it is up to the homeowner to decide which they prefer. The funds received by the homeowner can be used in any manner he/she desires; paying bills, making home improvements, taking a trip or any other purpose.
No repayments are made in reverse mortgages for seniors. Well, no repayments until certain conditions are met anyway. Full repayment of the mortgage is due when one of the following occurs:
- The homeowner dies
- Sale of the house by the homeowner
- The homeowner permanently leaves the property; i.e., taking up residence in a nursing home, with a family member or hospice facility
In many cases, a reverse mortgage is a benefit for its recipients. It should be noted, however, that there is a large closing fee due when the mortgage papers are signed; larger than the costs associated with a traditional mortgage.
Reverse mortgages for seniors are not a decision to be taken lightly and, as with all financial decisions, all paperwork should be closely examined before making a commitment. Don’t let the paperwork put you off though as professional assistance and counseling is available.
Learn More : Reverse Mortgages Pros And Cons
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Tags: loans, mortgages, personal finance, Reverse mortgage, reverse mortgages
