A senior reverse mortgage is a home loan for the homeowners who are elderly, and it requires no monthly mortgage payment. The borrowers are responsible for their homeowner’s insurance and the property taxes. A reverse mortgage can be explained by the financial agreement where the homeowners relinquish equity in their home in exchange for a regular payment to supplement the retirement income. A senior reverse mortgage will allow the homeowners access to home equity which they have built up at their home at the time and defer loan payment until they evacuate from the home, sell it or die. Since there is no monthly mortgage payment in reverse mortgage, the interest is added up to the monthly loan balance. Advantages of a reverse mortgage
1.It is a retirement tool to earn.
If you are seeking a second source of earning money after retirement, the reverse mortgage loan is the way to achieve this goal.
2. It eliminates mortgage payment.
The senior reverse mortgage does not require monthly mortgage payments. Instead, the mortgage is paid at the end of the loan. The borrower can relocate this funds to cater to other needs.
3. The reverse mortgage will help increase the life of retirement savings. The reverse mortgage will help you get a coin; this will greatly extend the life of the retirement savings
4. It is tax-free.
Since the reverse mortgage income comes in the form of a loan, this means it is typically tax-free
5. In reverse mortgage, you are not required to make any payments, not unless the homeowner has passed away or has moved out.
6. If the homeowner lives longer than what was expected, they can not owe more than the home’s value.
7. You can settle unexpected expenses and pay off debt using proceeds. Factors that influence the loan amount in reverse mortgage
1. Age of the homeowner.
2. The interest rates.
3. The lesser of the appraised value.
4. The value of home Facts about reverse mortgage
1. The homeowner must be 62 or older to qualify.
2. You must be living in the house or it should be your primary home.
3. You will receive a specific percentage of your equity but not all of your equity.
4. Hold the title of the home. Who can benefit from a reverse mortgage
1. A homeowner who does not plan to move.
2. A person who can’t afford the cost of maintaining their home.
3. A person who wants to make more money.
Types of Reverse Mortgages
1. Single purpose mortgages. They are offered by municipal government agencies and by states.
2. Federally insured reverse mortgages. They are also known as Home Equity Conversion Mortgages, HECMs.
3. Proprietary reverse mortgages. This is private loans and is backed by issuing company.