Advantages of a Reverse Mortgage
A reverse mortgage for seniors enables homeowners to get a loan against their home equity for tax-free income when they need it most. The loan does not have to be repaid until the homeowner either dies or leaves the home permanently. At that time the loan is due with interest accrued during the loan period. Generally, the sale of the home is enough to cover the loan plus interest with something left over. Safeguards include the fact that you will never owe more on your home than it is worth. However, there are more advantages to a reverse mortgage that have made it a popular choice among Americans and legal immigrants over the age of 62.
One of the biggest advantages of a reverse mortgage is that qualifying persons can make use of the money tied up in their home when they need it mostóduring retirement. Loans for the elderly are more difficult to get in the present economy than they were just a few years ago when retired seniors with little to no money owed on their homes, often tapped into the equity there to supplement their social security income. Today, it is more difficult for seniors to get home equity loans, making a reverse mortgage a great option for seniors desiring to supplement their retirement income with the cash accumulated in their homes. You can use the money any way you wish.
Reverse Mortgage Pros and Cons
Reverse Mortgages have been particularly beneficial to people whose retirement savings and investments have shrunk due to the recent downturn in the U.S. economy. This can place them at risk for losing their homes because they have less available retirement earnings with which to pay their monthly mortgages. For individuals looking for a more flexible home mortgage plan, a look at reverse mortgage pros and cons is a good idea.
There are some new safeguards in place that make reverse mortgages more attractive than ever before. New rules include more flexible eligibility requirements, fee limitations, insurance options and better counseling requirement for non-FHA-backed reverse mortgages. These new safeguards are intended to thwart conflicts of interest and to increase awareness for potential participants. They are also geared toward protecting particular homeowners. For example, new policies prohibit reverse mortgage lenders from obtaining a reverse mortgage for the purpose of investing in products or services offered by the same lender. The new rules further prohibit the lender from receiving referral fees or benefits from other investment entities selling products or services that are meant to be financed with the money received from the reverse mortgage proceeds.