Demand for this type of mortgage has been increasing over the years. More and more lenders are also offering this loan because it is secured by mortgage insurance. This means that lenders get full guarantee for their capital and associated costs of investments.
The Primary Advantages of a Reverse Mortgage
Seniors who will take out a reverse mortgage can keep their homes. This is one of the biggest benefits of this loan. Ownership of the property will remain yours even if you are getting payments from the lender. For most seniors, this is an ideal set-up because the home is a very important place for them. A reverse mortgage only involves the release of equity and does not cover ownership.
A reverse mortgage is a totally secured loan. You will never owe more than the value of your home. Assets will not be taken from you because the loan is already backed by the equity of your home. This is the best loan for seniors who can not qualify for any type of conventional loan. If you are cash poor but rich in home equity, then you can easily get a reverse mortgage.
Unburdening You from Financial Troubles
A reverse mortgage gives you the chance to easily pay off the remaining original mortgage on your home. Many seniors do not have a large remaining balance on their "forward" mortgage, paving the way to get the maximum out of a "backwards" mortgage. I call it a "backward" mortgage since instead of you paying the lender every month, the lender pays you! You can ask to be paid in a lump sum, or regular monthly payments, or a combination of both. Converting from a "forward" mortgage to "backwards" mortgage kills two "cash flow" birds with one stone. You eliminate the existing mortgage payments flowing out and replace it with monthly cash payments flowing in.
Because the money you get regularly from reverse mortgage does not require repayments, this is your chance to get relief from your monthly troubles. As a retiree, you have probably lost your regular source of income. A reverse mortgage can replace that income so you can live a more comfortable and trouble free life.
This loan can also become a big life saver if you are facing the prospect of homes foreclosure. The lender can pay a lump sum for you. So you will have enough money to pay all your debts to effectively avoid foreclosure. In case you do not need a lump sum, you can choose to be paid monthly so you can have a regular income.
Take the Mandatory Counseling
Mandatory counseling is required if you are going to apply. You can not deny the fact that there are many scammers who are out to cheat people especially the elderly. Scams are particularly rampant in the home loans market.
To protect the seniors, the federal government has made it a requirement for applicants to go through counseling. There is a wide network of independent and professional counselors who are ready to help you and who can recommend the best financial options for seniors.
Federal counseling is mandatory and you have to go through it. The sessions can help you a lot especially in determining your options. Through counseling, you will be able to understand everything about reverse mortgage and its advantages.
To learn mortgage about this mortgage option designed specifically for seniors, visit the website of the American Association of Retired Persons for more information. They have posted a ton of great information, advice, and point you in the right direction for picking the loan for you individual circumstances.