With the downturn in the economy and home sales at a halt, many seniors are having trouble surviving on their fixed income. Applications for reverse mortgages are on the rise because they offer seniors options that traditional home equity loans and lines of credit do not offer. To help defray the costs of living, many more seniors are applying for reverse mortgages now than ever before. Reverse mortgages are actually loans that homeowners can apply for from a bank to access the equity in their home. Reverse mortgages are only available to seniors age 62 and over. Reverse mortgages also known as a Home Equity Conversion Mortgages are made available by The U.S. Department of Housing and Development (HUD).
The Benefits of a Applying for a Reverse Mortgage
A reverse mortgage is the only loan option that allows seniors age 62 or older to tap into the equity of their home and receive a monthly cash payment while continuing to reside in their own home. In addition, it is the only loan option available to seniors that requires no monthly payments. To remain eligible, all seniors need to do is comply with the terms of the reverse mortgage and continue paying their property taxes, homeowners’ insurance and other out-of-pocket expenses such as gas, electric, water and sewer.
Qualifying For a Reverse Mortgage
Seniors who live in a either a single family or home with 1-4 units, a condominium approved by HUD or manufactured home that complies with FHA standards may be eligible to apply for a reverse mortgage. Other eligibility criteria include, but are not limited to the outstanding balance on the underlying mortgage, the age or ages of the applicants, the equity in the home and whether the applicant or applicants have any outstanding federal debt. Typically, to qualify for a reverse mortgage, seniors are required to be close to paying off their underlying mortgage or have paid their mortgage off.
Income is Not Considered When Applying for a Reverse Mortgage
Unlike a traditional equity loan, income is not a factor in the approval process when applying for a reverse mortgage. Unlike home equity loans and lines of credit that factor income into the approval process, income is not a deciding factor when applying for a reverse mortgage. Seniors that are struggling financially will find getting approved for a reverse mortgage is easier than a line of credit or home equity loan.
Amount of a Reverse Mortgage
The amount seniors are eligible to apply for and receive depends on a variety factors, including but not limited to how much equity the applicant has in the home, the appraisal value of the home, and the current interest rates. How the loan will be disbursed depends on what monthly schedule payout an applicant selects. There are several scheduled payout options applicants can choose from.
Reverse Mortgage Payoff
One of the other main benefits of applying for a reverse mortgage is that seniors who continue to reside in their home and comply with the terms of the reverse mortgage will not be required to repay any monies back on their reverse mortgage during their lifetime. Upon death, the home will be sold and monies recouped from the sale will be used to pay off the reverse mortgage. Any additional money recouped above and beyond the payoff will be distributed to the applicants’ heirs or as designated.
A reverse mortgage is an excellent option for seniors who are in need of additional income and would like to continue residing in their home, but are not interested in applying for a home equity loan or line of credit. Reverse mortgages are the only alternative to a loan that allows seniors to remain in their own home while collecting payment-free additional income. For seniors looking for a way to increase their monthly income, a reverse mortgage is an excellent option.
- Alabama Assisted Living
- Arkansas Assisted Living
- Baltimore, MD Assisted Living
- Boston, MA Assisted Livings
- California Assisted Living
- District of Columbia Assisted Living
- El Paso, TX Assisted Living
- Honolulu, HI Assisted Living
- North Carolina Assisted Living
- Philadelphia, PA Assisted Living
- South Carolina Assisted Living
- Tampa, FL Assisted Living
- Tulsa, OK Assisted Living
- Wichita, KS Assisted Living