Reverse Mortgages For Seniors
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.
A reverse mortgage can be explained most simply as a type of home equity loan for which no repayment is necessary until the homeowner dies, sells the property, or no longer uses the property as a permanent residence.
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 property in question must have been paid for in full, or have just a small balance remaining on the mortgage
- Insurance and taxes must continued to be paid by the homeowner
- Attendance at a mandatory counseling session is required to ensure full understanding of the 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.
The homeowner can opt to receive monthly payments, a line of credit or a single lump sum payment; whichever suits their needs best. 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.
As part of the reverse mortgages for seniors system, no repayments may ever need to be made by the senior citizen. Well, no repayments until certain conditions are met anyway. Repayments need only be made in the case of the following occuring…
- 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
So, there are clearly some major benefits to be had from reverse mortgages. When looking at the benefits though, still bear in mind the fact that a large closing fee may be due on the signing of the mortgage papers. This fee is typically larger than that of a traditional mortgage and it can vary significantly from place to place..
As with any financial decision, all aspects of reverse mortgages for seniors should be closely examined before signing the paperwork.
As you or a member of your family reaches retirement you’ll want to read more about reverse mortgages pros and cons. You can also read more about reverse mortgages for seniors here.
