Reverse mortgages a good option for retirees particularly in helping them to borrow money with the collateral of their own home. Another name for reverse mortgages 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 looks at some of the advantages of considering reverse mortgage.
Retired seniors can have a safer mortgage by choosing home equity mortgage loans. It is very devastating to get reverse mortgages when they came to the attention of many of the retirees over the years, the authorities have come with conventions to ensure that reverse mortgages are more beneficial when it comes to mortgage options for retired seniors.
Some of the new rules particularly take care of surviving spouses as opposed to the older versions of the mortgage. Surviving spouses were not properly taken care of by previous versions of reverse mortgages as they will easily use the home if the borrower of their HECM loan passed away. New rules of come into play to help surviving spouses to secure homes even if they’re not included as part of the primary borrower.
Owing to the fact that there are financial assessments in the acquiring of HECM loans, there is a great reduction of risks. 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.
With home equity conversion mortgages user have another benefit of acquiring housing at lower costs or no cost. Research reveals that housing expenses account for 1/3 of the total monthly income of retired seniors and therefore, cutting down the expenses when it comes to housing is a huge benefit for their financial position.
Another benefit of reverse mortgages is that the proceeds of the loan are not taxable income. This therefore means that if a retired senior considers a monthly distribution or a lump-sum payment take care of the expenses, the money is exempt from taxes.
In conclusion, reverse mortgage is the best option when it comes to the financing of houses for retired seniors.