Reverse mortgages have grown much these days to achieve greater visibility in the eyes of the public. They can help senior citizens enhance their lifestyle by offering greater financial freedom to them. A reverse mortgage converts home equity into cash flow for the senior home owner. The cash flow can be obtained as monthly incoming payments or can be drawn upon as an equity line for one-time payouts – or a combination of the two.
Reverse mortgages can be a source of immediate cash when needed. There are many providers of reverse mortgage loans these days and the competition has made it easy for any qualifying senior to obtain necessary cash to improve their lifestyles.
The senior taking reverse mortgage can continue living in the same home that has been reverse-mortgaged and get monthly payments from the reverse mortgage. This additional income compliments any existing retirement income (including social security) nicely. Seniors can easily calculate the amount of money they will get from this loan through the use of a reverse mortgage calculator.
Reverse mortgage money can be used according to the free will of the senior home owning citizen. The money can be spent on home repairs, remodeling, medical expenses, grand children education expenses, or to take a dream vacation and travel the world. It would simply be the call of the home owner.
A reverse mortgage can be used to pay off an existing mortgage. This works in two beneficial ways – there are no more payments to make on an existing conventional mortgage, and there is an additional income line via the reverse mortgage route. All of this translates into increased spending power and disposable income for the senior home-owning borrower.
The money obtained through reverse mortgage is not repayable until the home owning senior passes away or moves out of the home. The lender cannot possess the home if the legal heirs decide to repay back the loan in order to keep the house for themselves. All these are the advantages or pro sides of a reverse mortgage.
Reverse mortgage can have the down sides or cons as well. Taking out reverse mortgages can be costly sometimes as these are profitable items for the reverse mortgage lenders. The money payable to the lender can take the form of origination fees, closing costs or other miscellaneous charges. Another limitation of reverse mortgage is that if the age of the borrower is considerably less, so is the amount that can be obtained through reverse mortgage (minimum qualification age is 62 years). Senior borrowers using reverse mortgage to finance their lifestyles are still responsible for paying taxes, insurance and for home repairs, as applicable.
Seen in balance, the cons of reverse mortgage are of lesser effect than the pros of taking one.