The Advantages Of A Reverse Home Mortgage For Seniors
There is no question that most people who are living on fixed incomes have a tough time making ends meet every month. Even though a large number of these seniors are on fixed incomes and live in wonderful abodes where they have dwelt for years, and have little, if any, debt left against them, they still have a tough time financially. One excellent solution that has come about in recent years is the reverse home mortgage, which allows seniors who are at least 62 years old to be able to tap into the equity in their home to help them make life a bit easier financially.
There are several major benefits that seniors can enjoy through the use of a reverse mortgage on their home. The biggest benefit that gets the most attention and that motivates most people to consider this option is the fact that this type of mortgage pays the homeowner. The homeowner can choose to receive the proceeds from a reverse mortgage loans as one lump sum or it can be received each month to supplement the income of the seniors.
This arrangement is quite different from the home mortgage that people take out on a home when they first buy a place. The traditional mortgage leaves the borrower with monthly payments they must make to the mortgage company. With a reverse loan, the opposite happens and a portion of the equity is sent to the homeowner every month from the lender. To qualify, all owners on the title have to be 62 or older.
Reverse mortgages are available to those who are at least 62 and who have a considerable amount of equity in their homes, even if they still have a balance on their current mortgage. In this situation, the original mortgage and any other liens on the home are paid off first from the proceeds of the reverse-style mortgage.
There is a choice to take the proceeds in either a lump sum or monthly payments. Many prefer to receive the payments each month because the interest on the reverse mortgage loan begins to accrue as soon as a payment to the homeowner is made. With a lump sum, the interest amount they pay will be higher as opposed to receiving a smaller amount each month. Therefore, less interest will be charged when a smaller amount is paid out to the homeowners on a monthly basis.
Whichever way a homeowner chooses to access the equity in their home through this type of mortgage loan arrangement, the money received is considered loan proceeds and so it does not affect their status with Social Security and it is not taxable. Because of this, a reverse home mortgage can help older homeowners be much more comfortable in their retirement years without putting their other benefits in jeopardy at all.