A reverse mortgage is a tool that helps retired seniors to borrow money against the value of the home. They are also known by the name home equity conversion mortgage (HECM). Home equity conversion mortgages are designed to help retired seniors to have comfortable living situations in their retirement by having most of the expenses taking care of particularly in healthcare costs. This article looks at some of the advantages of considering reverse mortgage.
Home equity conversion mortgage loans are a safer option for retirees as compared to other types of mortgages. It is very devastating to get reverse mortgages when they came to the attention of many of the retirees over the years, the authorities have come with conventions to ensure that reverse mortgages are more beneficial when it comes to mortgage options for retired seniors.
New rules that have come into play allow for home equity conversion mortgages to be able to include surviving spouses and this makes reverse mortgages to be beneficial over most of the retired senior mortgages. Surviving spouses were not properly taken care of by previous versions of reverse mortgages as they will easily use the home if the borrower of their HECM loan passed away. FHA treatment necessary steps to prevent this from happening and therefore surviving spouses can be able to retain their homes even if they were not included as part of the HECM loan.
Home equity conversion mortgage loans also have lower amount of risk to retired seniors due to the amount of financial assessments that take place. It is required that the lender of home equity conversion mortgage comes conduct proper initial assessment before giving out loans and in the case where the borrower cannot be able to meet other financial obligations that relate to housing expenses, then the borrower will have to take care of it and this makes reverse mortgages to be safer.
Another benefit of home equity conversion mortgage is that you’re able to secure housing at a lower cost or no cost at all. With a third of the total monthly income of the retired seniors going to housing expenses, as revealed by research, cutting down the costs of housing can be able to liberate them financially.
Another reason why reverse mortgage are beneficial is due to the fact that the loan proceeds are not taxable income. Regardless of whether the retired senior require a monthly distribution or a lump-sum payment to be able to cover most of the expenses, all of that will not be subject to taxable income.
In conclusion, reverse mortgage is the best option when it comes to the financing of houses for retired seniors.