On Friday, I told you about the two negative aspects of Reverse Mortgages. Just to recap, they are: The seemingly high closing costs and the compounding negative ammortization. Today I want to give you some of the positive aspects of Reverse Mortgages.
1) Peace of Mind - The biggest benefit of a Reverse Mortgage is that the borrower knows they can stay in their home for as long as they want to. Survey after survey has shown that most of the elderly do not want to move or sell their house. If they are having financial difficulties, a Reverse may be the only way that they can be sure that they will not get thrown out by a creditor or mortgagor.
2) Increased Income and/or Savings - Most seniors are on a fixed income that has not kept up with the increased cost of food, gas or heat. A Reverse Mortgage can solve their financial troubles and for some, even having a few thousand in their bank account can have a tremendous positive impact on them.
3) Change to Positive Cash Flow - Many Reverse Mortgages are paying off an existing mortgage and when the borrower can receive monthly income from the lender and eliminate their monthly payment to their old lender, they can see changes of two, three, four thousand dollars a month or more.
4) Foreclosure Rescue - This one is a no-brainer. Reverse Mortgages have saved thousands of people from Foreclosure. In today's times, many Reverse Mortgages have been used after the old lender has agreed to a short sale and accepted less than they are owed. For many of these seniors, they could not qualify for any other financing.
5) Non-Recourse - All Reverse Mortgages are non-recourse loans. This means that the lender can never come after the borrower or their heirs for anything other than the property. If the value of the property drops OR the borrower lives much longer than expected, the lender eats the difference. At the same time, if there is poistive equity at the end of the loan, the borrower or their heirs keep it.
6) Repair Unsafe Conditions - Many Seniors do not have the funds to keep their home in proper condition. Many more need funds to make a needed change in their home, such as moving their bedroom to the first flooor, installing a ramp or a chair lift, etc. Reverse Mortgages have helped thousands of people make these needed changes.
7) Positive Lifestyle Changes - Reverse Mortgages have helped seniors who wanted to help their kids, help their grandchildren, take a vacation, buy or fix their car, buy a second home, and in general, to finally live their dreams with their own money that they built up over many years in their home equity, without having to pay it back during their lifetime.
8) Get the Insurance Coverage They Need - Most seniors do not have Long-Term-Care (LTC) insurance. Many want to leave an estate to their heirs. Reverse Mortgages have been used to purchase the LTC or Life Insurance that accomplishes these goals.
These are just a few of the many benefits of a Reverse Mortgage. Tomorrow we'll talk about the actual process of getting a Reverse loan.
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