Many things are said about a senior reverse mortgage that scares seniors from getting one. It is essential for everyone to get the facts right to gauge if reverse mortgage fits their situation. This way many people will get to benefit from a senior reverse mortgage. With that said the following are ten reasons that you shouldn’t be afraid of a reverse mortgage.
1.The title of your property stays in your name – With a reverse mortgage, you retain the ownership of your home, and the loan is just secured by the lien on the home.
2. Flexibility in receiving and using funds.- There are no restrictions when it comes to how you use the funds you receive from the reverse mortgage. Also, the funds are readily available to borrowers in whichever method they want be it monthly, in some line of credit or can be given in lump sum
3.Fees are regulated by HUD – The HUD usually controls the fees charged on a reverse mortgage, and no lender is allowed to charge extra fees. These fees are standard and conventional.
4.They are non-recourse loans – Reverse mortgages are in such a way that when the loan exceeds the appraised value of the borrowers home, the borrower is not expected to pay the extra amount. Also, if the home is sold for an amount more than the loan, the difference is paid to the borrower or their beneficiary.
5.Have closing costs that compete with conventional loans – Just like traditional loans; mortgages have closing costs which are inexpensive. In actual sense, these costs are equal to closing costs of other loans.
6.Does not require monthly payments – Mortgage is usually due upon the death of the last beneficiary or once the borrower moves out of the home permanently. There are no premiums that are made provided the borrower lives in the home. This helps in minimizing the possibility of foreclosure. The borrower is however entitled to pay for insurance, property tax as well as funding for the maintenance of the home.
7. It has many plans to choose from – Many options come with Home Purchase Programs and HECM to ensure every borrower get the programs that fit them well. Some of the available plans include fixed rate and adjustable rate options. This means that almost every senior can get a program that meets their needs.
8.The reverse mortgage interest rates are based on the program one chooses – The credit score or borrower’s income does not determine what interest rate one gets. Unlike in conventional loans where one’s interest rate is calculated from their income, assets and credit score, the interest rate on a mortgage is determined by the program a borrower selects.
9.Does not have any impact on Social security and Medicare – Beneficiaries of a reverse mortgage can still obtain Social security and Medicare. This is because any proceeds from a reverse mortgage are not usually considered as a form of income.
10. Guaranteed funds – A borrower is always assured of access to funds during the term of the loan as long as they abide by all terms of the loan. Some of these conditions may include paying for insurance, maintenance of the home and paying property taxes among others. The Explained above, are reasons enough why you should never be afraid of getting a reverse mortgage. It might just be what you need to give you peace of mind during your retirement.