Reverse Home Mortgage Uses
Reverse mortgages have turn out to be a very common alternative for seniors. They’re so popular because it affords the householder the liberty to apply the funds of the home loan for whatever they prefer. As the homeowner has absolute control about how to apply the funds of the mortgage, there are numerous diverse ways in which reverse home loans are being applied.
To get a clear idea of what are some of the different ways that the proceeds from reverse mortgages are being used, we have included in this article a few of the most common ones. However, since you can use the proceeds from the reverse mortgage in any way you decide, in reality there are as infinite ways to use the money from a reverse home loan.
Reverse Mortgages and Long Term Medical Care
Many senior citizens are finding themselves in a position where they have to discover diverse ways to finance their long-run care due to the raising fees in health care. Many seniors have chosen a reverse home mortgage as a manner to fund their healthcare fees. They spend the revenue to pay for the current monthly fees or a long term care premium.
Some seniors apply the funds from the reverse mortgage to ensure that their medical needs will be paid for. Also, the FHA insurance works in the benefit of the reverse mortgage because it guarantees that the home owner will receive payments from the lender for as long as the homeowner stays living in the house.
The proceeds from a reverse mortgage is tax-free. In addition, in most cases the money you receive doesn’t change the benefits you receive from Medicare or Social Security. Of course, talk to your public accountant or your reverse mortgage counselor (you are entitled to one,) before choosing a reverse mortgage.
People use a reverse mortgage to pay for health care in one of several ways:
– To pay for an emergency medical expense
– To pay for ongoing monthly health care bills
– To pay for the long term care insurance premium
Using a Reverse Home Mortgage to Stop Foreclosure
With the current economical conditions, foreclosures are at an all time high. They affect homeowners of all ages. If you qualify for a reverse mortgage, you may apply for a reverse mortgage and stop the foreclosure process in your home. As a matter of fact, you can use a reverse mortgage so you can stay in your home for as long as you want.
By using a reverse home loan, a senior citizen facing foreclosure on his home can turn the tables around. Instead of having to make monthly payments, the homeowner can receive monthly “income” from the bank. When you get the mortgage, the foreclosure mortgage can be paid off and the home taken off of the foreclosure procedure.
Another important benefit is that the reverse mortgage acts as a protective shield. The homeowner can never be thrown of the home for as long as he stays in the house. The homeowner is only responsible to pay for real estate taxes, insurance and regular maintenance costs.
The main drawback to a reverse home mortgage is its high fees. Nevertheless, if you compare these fees to the possibility of loosing your home, it can be well worthwhile.
Even though you can stop foreclosure by applying for a reverse mortgage, it’s advised that you talk to a professional reverse mortgage broker before choosing this alternative. A good broker specializing on reverse home mortgages should be able to tell you if this is a viable solution for you.
Using a Reverse Home Mortgage to Fund Your Retirement
Some seniors are finding it hard to maintain a lifestyle they have grown accustomed; especially with the increasing life expectancy. Some are turning to reverse home mortgages to help them fund their retirement years. With a reverse mortgage, you can choose to receive monthly payments from a bank. In many cases, this funds work as a second income.
A reverse mortgage works by using the equity you have accumulated in your home. You can get cash for that equity. Seniors can usually choose to receive those funds as a one time payment or as monthly payments. Instead of you making payments to the bank, the lender makes you payments decreasing the equity in your home at the same time.
Many seniors consider the payments from the reverse mortgage as a second income. You can use the money for any reason you see fit.
In addition, since you don’t need to make any payments to the bank, your cash flow improves. You can keep and save that money so that you can use it in case of an emergency.
Of course, before choosing a reverse home mortgage, talk to an experienced reverse mortgage broker specializing in this type of mortgages. In addition, if you choose a FHA insured reverse home mortgage, you are entitled to a free third-party counseling session where you can ask any questions you may have.