Reverse Mortgage to help seniors improve Quality of Life
There is a new financial tool to help seniors improve their quality of life and remain in their homes for as long as they can. Today most seniors are retired and have lived in their home for many years and have built a significant amount of equity in their home. Most seniors are living on a fixed income made up of pensions, social security and or retirement accounts. Seniors today facing higher expenses with healthcare, home improvement, taxes and every day activities of living. Unfortunately their expenses are increasing at a rate greater than their monthly income increase rate and therefore are concerned with how they will be able to maintain their standard of living and afford to maintain and remain in their home.
A reverse mortgage is a new mortgage product that was designed by AARP and the Federal Housing Administration to help seniors with the high costs of their living expenses. A reverse mortgage is a mortgage that allows a senior to use the equity that they have in their home. With a reverse mortgage the home owner retains ownership of their home and does not have to make any monthly mortgage payments. The home owner can use the funds from the equity for anything they want. The home owner can receive the fund in various ways; they can take one lump sum, they can open up an equity line where they use the funds on an as needed basis, they can set up a monthly income stream that allows them to receive a monthly income for the rest of their lives. The funds that the home owner receives from the equity of their home are income tax free(can vary per state), it does not impact social security or medicare and best of all the home owner does not have to make a monthly mortgage payment for as long as they reside in the home.
Reverse mortgages are not for every senior home owner and the folks that do opt for a reverse mortgage can be assured that there are safety features to protect the home owner and their heirs. With a reverse mortgage the home owner will have to go through a third party councilor to make sure they understand what they are doing. Reverse mortgages are NON-Recourse loans, meaning that the lender cannot come back to the home owner and or the heirs if the home value of the house is less then what is owed. With a reverse mortgage there is a payment guarantee and there is NO pre-payment penalty if the loan is repaid.
Reverse mortgages are used in many different ways. Most seniors that use a reverse mortgage today will use the funds for healthcare costs, prescription drugs costs, home improvements costs, property taxes and travel. There are many different ways you can use a reverse mortgage.