Reverse mortgages can become a vital component of any senior’s retirement plan. This is because they are a sure source of funds now and in the future. However, you need to note that the reverse mortgage is not the right choice for every individual. To be able to understand if this is the right move to make, you will need to get conversant with the advantages and disadvantages.
What are the advantages of a reverse mortgage?
Reverse Fund Limitation
The reverse mortgage is a loan that makes it possible for seniors above the age of 62 to live a more comfortable life and have financial flexibility.
When you acquire this particular loan, you can still continue living in your home and even retain its title.
When you finally receive the proceeds of the loan, you can choose to take the funds in a lump sum, a line of credit or a steady stream of monthly installments for a set time of period for as long as you are still living in the home. You can also choose to a combination of all these methods.
In case you have an existing mortgage on your home, you can be able to use the reverse mortgage to pay it off. You will also not be required to make any monthly deposits on your home from the outstanding amount from your reverse mortgage.
The loan that you acquire from the reverse mortgage will not be taxed; this is because according to the federal government it is not considered as taxable However, if you would like to know more about this you could contact “America Reverse” and get your Free No Obligation Informational Guide.
The reverse mortgage will also not have any significant impact on the borrower’s social security or even the Medicare benefit. However, it is important that you consult a professional to determine any implications that the loan might have on you.
If your home appreciated in value over the years after you have taken the reverse mortgage, you are able to refinance your mortgage to enjoy even more loan proceeds.
Your spouse or heirs will not be liable for any amount of the mortgage that exceeds the value of your home. This is because the reverse mortgage is considered a non-resource type of loan.
In case the loan is repaid after you pass away, and some equity still remains, it will be forwarded to your heirs.
What are the Cons of A reverse Mortgage?
You will need to note that the balance that you have will increase over time as the interest of the loan and the fees also accumulate.
Your eligibility for government programs such as Medicaid or Supplemental security income might be affected by the mortgage.
As the equity of your home gets used up, so does the assets left behind for your heirs to inherit. I the case your heirs are interested in your home, they will still need to pay up the loan balance you left behind. The fees that are applicable might also be higher compared to a normal mortgage.
The loan matures when the last surviving borrower passes away, and it has to be paid immediately. It will also reach maturity in case it is no longer the borrower’s principal residence, or in the case you have vacated the home for more than 12 months. If you fail to maintain the property taxes or insurance, your home loan will also become due for payment.
If you are interested in getting more information about reverse mortgages or need assistance in getting one, fell free to contact us and get your Free No Obligation Informational Guide. At America Reverse, we pride ourselves in offering our clients with the best quality service. Contact us today! Check out what Bill Medley from the Righteous Brothers to say about reverse mortgages.
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