Finance For Seniors : Reverse Mortgages
In these times of financial insecurity, many of us are struggling to make ends meet, none more so than the elderly. However, reverse mortgages for seniors are an option to relieve monetary stress should it start to become overwhelming for them.
While they may not be the answer for all, they can be the ideal solution for many who are facing monetary difficulties.
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.
Since the decision by the bank or finance company is not based on the homeowners income, these reverse mortgages are fairly easy to obtain for the more elderly members of our society, particularly so because they have most of their money tied up in their property, which is what these types of mortgages are leveraged on.
There are stipulations for eligibility, 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 amounts of the loans will vary, depending on the value of the home and the equity therein.
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. That is to say, no repayment for as long as the homeowner makes the home their primary residence and is still alive. Full repayment of the mortgage is due when one of the following occurs:
- Death of the homeowner
- 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. 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..
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 For Seniors
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