Benefits of Reverse Mortgage
Reverse mortgage products offer a wide variety of benefits for seniors. The most obvious benefit, of course, is the availability of needed cash without having to return to the workforce. Because there are no payment obligations like you would have for a conventional loan (any current mortgage would be paid off for a qualifying borrower), you are better able to manage your other monthly obligations (utilities, food, etc). This source of funds can make a remarkable difference between a subsistence retirement and one that is enjoyable and free of the usual money worries.
A reverse mortgage does not affect pension benefits. This is best done when the equity is used to finance an ongoing income stream rather than being taken as a lump sum payment. Funds can be used for any worthwhile purpose, such as travel, home improvements, or the purchase of a new car.
Some key benefits include:
- You can pay off your existing mortgage
- Reverse mortgage "income" is tax-free
- You will continue to own your home
- Allows You The Ability to Eliminate Mortgage Payments
- No monthly payments are required while you live in the home
- No up-front fees collected
- There are no restrictions on how the money is used
- You can repay at any time with no pre-payment penalty
- Reverse Mortgages are flexible
The older you are, the more money will be available to you. Seniors must be at least 62 years old and must own their home. Eligible homes in this case include single detached homes as well as HUD-approved condominiums and dwellings.
There is an obligatory mortgage insurance associated with reverse mortgage. It means that if the selling price of your home is lower, than the amount of costs, the difference is paid from the insurance. Your other assets will never be used to pay your reverse mortgage loan.
You can decide, whether you take the reverse loan with variable interest or with the fixed one.