A reverse mortgage is a tool that helps retired seniors to borrow money against the value of the home. Another reference to reverse mortgage is home equity conversion mortgage (HECM). Retiring can be an extremely difficult process particularly because most of the income is cut-off this is why reverse mortgages are built to secure a better living conditions for retirees by helping them to cover the major expenses, especially healthcare costs. This article, we will delve into some of the benefits of getting reverse mortgage.
Retired seniors can have a safer mortgage by choosing home equity mortgage loans. Initially, there were a few contentious issues about reverse mortgages but they were resolved and some of the deliberative changes makes reverse mortgages to be safer for retirees.
New rules that have come into play allow for home equity conversion mortgages to be able to include surviving spouses and this makes reverse mortgages to be beneficial over most of the retired senior mortgages. If a spouse is not included in the loan, then they run a risk of losing the home when the borrower of the reverse mortgage loan passed away. FHA treatment necessary steps to prevent this from happening and therefore surviving spouses can be able to retain their homes even if they were not included as part of the HECM loan.
Home equity conversion mortgage loans also have lower amount of risk to retired seniors due to the amount of financial assessments that take place. Even with home equity conversion mortgages, there are some housing related expenses that the borrower is expected to take care of themselves but even so, the financial assessment by the lender can be able to give them insight as to whether the retired senior can be able to take care of such expenses as property tax, homeowners insurance, HOA duties and the maintenance expenses, of which they can be able to step in if they do not have the ability to fulfil such financial obligations which in itself makes reverse mortgages to be safer.
Another benefit of home equity conversion mortgage is that you’re able to secure housing at a lower cost or no cost at all. With a third of the total monthly income of the retired seniors going to housing expenses, as revealed by research, cutting down the costs of housing can be able to liberate them financially.
Another benefit of reverse mortgages is that the proceeds of the loan are not taxable income. The amount of taxable responsibilities can be able to go lower whether retired senior art for monthly distribution or a lump-sum payment to be able to cover the expenses as none of the payments will be subject to taxable income.
The safety of reverse mortgages is outspoken at the bottom line is that they are the best option for retired seniors when it comes to housing.