Finance For Seniors : Reverse Mortgages
2:15 AM
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.
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.
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 age of the homeowner must be over 62
- The property in question must have been paid for in full, or have just a small balance remaining on the mortgage
- Taxes, homeowners insurance, mortgage insurance, and a hefty closing fee, must 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. A loan is obtained based on the equity in the home, with disbursements available in three different forms. 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.
As part of the reverse mortgages for seniors system, no repayments may ever need to be made by the senior citizen. 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:
- The homeowner dies
- The property is sold by the homeowner
- The homeowner takes up long-term residence at the home of another family member or at a nursing home
So, there are clearly some major benefits to be had from reverse mortgages. 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.
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.
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 age of the homeowner must be over 62
- The property in question must have been paid for in full, or have just a small balance remaining on the mortgage
- Taxes, homeowners insurance, mortgage insurance, and a hefty closing fee, must 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. A loan is obtained based on the equity in the home, with disbursements available in three different forms. 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.
As part of the reverse mortgages for seniors system, no repayments may ever need to be made by the senior citizen. 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:
- The homeowner dies
- The property is sold by the homeowner
- The homeowner takes up long-term residence at the home of another family member or at a nursing home
So, there are clearly some major benefits to be had from reverse mortgages. 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.
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