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Category : Reverse Mortgage

6 Benefits of Reverse Mortgages for Seniors

The benefits of reverse mortgages for seniors allow access to many things that may have otherwise been inaccessible. You can gain an immense amount of cash, which is a valuable tool. Utilize your reverse mortgage to the best of your abilities. Want to know more about how reverse mortgages work for seniors? Let’s take a look at a few benefits of a reverse mortgage and why it may be a great choice for you.

There Are No Monthly Payments

Unlike a traditional mortgage, there are absolutely no required monthly payments for a reverse mortgage. Alongside required monthly payments, you may also receive penalties for late payments made to lenders for a traditional mortgage. You won’t have to worry about any of this with a reverse mortgage. As long as you live in your principal home, you will be the one receiving payments, not your lending institution.

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You Have Tax Liability

Reverse mortgages work for seniors because you can enjoy tax liability. Money received from a reverse mortgage is not considered to be income, according to the IRS, it is classified as a loan advance. While other retirement income like distributions from a 401(k) or IRA payment is taxed, funds received from your reverse mortgage are not. 

Helps Secure Retirement

A great benefit of reverse mortgages for seniors is that it helps to secure retirement. If a retiree doesn’t have access to a substantial amount of cash but they have equity, a reverse mortgage can help them to liquify their assets. If you would like to travel, invest, renovate your home, or assist grandchildren with college, a reverse mortgage is a great option. 

retired couple enjoying a cup of coffee at their home

You Don’t Have to Move

Reverse mortgages work for seniors because you don’t have to move. A lot of retirees have a personal connection with their home and have no desire to leave it behind. If your home means a lot to you and your family but you want to liquify your asset, a reverse mortgage is a noteworthy option. To liquify assets, some people may sell their home and move to other neighborhoods, or downsize. A reverse mortgage offers you the opportunity to stay in the home you love, while still gaining cash to enjoy retirement. 

You Can Pay Off Existing Loans

Reverse mortgages work for seniors by allowing you to pay off existing loans. If you have outstanding loans that you would like to decrease or completely eliminate, a reverse mortgage will give you access to the cash you need to do that. Use some of the cash you receive to pay off existing loans and use the rest of it to enjoy life. 

Conclusion

The benefits of reverse mortgages for seniors have been proven to make life more enjoyable for many retirees. If you’re retired and need access to more cash in order to enjoy a higher quality of life, a reverse mortgage is something you may want to consider.

 

Categories
Category : Reverse Mortgage

Pros & Cons of Reverse Mortgages

Quite a few retirees consider taking out a reverse mortgage. While a reverse mortgage may be a dream come true and work well for some people, for others it may not. Whenever you’re making a big decision, it’s always best to outweigh the pros and cons. Is a reverse mortgage a bad idea? Let’s take a look at the pros and cons of reverse mortgages

What is a Reverse Mortgage?

A reverse mortgage is a process of borrowing against the current value of your home in exchange for a line of credit or cash from a lending institution. Reverse mortgages typically do not require monthly payments. The loan is often repaid if you or an heir sells the home sometime later. 

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Pros

Now that we understand what it is, let’s get into the pros and cons of reverse mortgages:

  • Helps secure retirementReverse mortgages are a great option to secure retirement. If retirees don’t have an exorbitant amount of cash savings but have equity within their homes, a reverse mortgage can give them access to cash that would otherwise be inaccessible. 
  • You don’t have to move – A reserve mortgage allows you to liquefy your asset without having to move. If you’re in need of cash but you have no interest in selling or downsizing, a reverse mortgage is a route you may want to take. 
  • You can pay off existing loans – You can use proceeds from your reverse mortgage to assist you in eliminating or decreasing existing loans. 

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Cons

Is a reverse mortgage a bad idea? The pros and cons of reverse mortgages will have different meanings to each individual. If you’re wondering what are the downsides of a reverse mortgage, take a look at the following information: 

  • Possible foreclosure – Before considering a reverse mortgage, you must ensure that you can comfortably afford your property taxes, homeowners insurance, HOA fees, and all other costs associated with owning your home. You must also ensure that you reside in your principal home for the majority of the year. If at any point these things don’t happen, you could default on the reverse mortgage and lose your home to foreclosure. 
  • Heirs could inherit less – When you pass away, heirs will be required to pay the full loan balance or 95% of the home’s appraised value. Reverse mortgages usually require your home to be sold to repay the debt, meaning your heirs will not be able to inherit your home or cash from the sale as an asset.
  • They can be complicated – There are a lot of rules that you need to make sure you understand before signing off for a reverse mortgage.

Conclusion

Regardless of what the pros and cons of reverse mortgages are, it’s important to fully understand the terms and conditions. A reverse mortgage may be worth it to you if your home is increasing in value considerably, you plan to stay in your home for a long time, and you can cover the costs of your home. Cheers to a happy retirement!