Have you been reading and researching a lot about Reverse Mortgage lately? Is there something that’s holding you back from taking that ‘big step’? Well, maybe after reading this, you’ll be able to make up your mind….
The key is to think it out rationally, weighing out the odds without any emotional baggage….
Reverse Mortgage is the opportunity to harness the equity of your own home while you still live in it. A few skeptical people might be concerned about the high fees associated with Reverse Mortgage. But then, that’s there with every loan. And the cash that is received is absolutely tax-free.
Borrowers of Reverse Mortgage have to pay for a mortgage insurance just like a regular mortgage even though it is added up in the loan. In regular mortgage, the mortgage insurance secures the lender in event of a default payment but in reverse mortgage, it is only to ensure that the lender is repaid fully if the value of the home depreciates.
Refinancing the house may be another option for homeowners who would want some immediate cash. But this might hardly suit the retirees since that would entail fixed monthly re-payments.
Some say that borrowers of Reverse Mortgage may find it difficult to qualify themselves for Medicaid since Medicaid would consider the Reverse Mortgage cash as an asset. But then, it actually is! I feel, it’s always better to have your own asset used to support you medically rather than locking up your asset and trying to qualify for government medical aid.
Borrowers of Reverse Mortgage are still responsible for bearing the expenses like the property taxes and home repairs. This is true with any loan and is just due to the fact that the home is still in the borrower’s name and the lender of the Mortgage has no rights on it until the borrower’s demise or he/she moves out.
After the death of the last borrower, in case of joint loans, the lender sells the home to recover the loan; so the heirs do not inherit the home. But this is, I feel, better than leaving behind a legacy of loans and debts for the heirs to pay off.
Reverse Mortgages are approved for all homeowners who are 62 or older without any income or credit check. This type of loans were first introduced in the market in the 1960s and since then it has only seen rise in its popularity. Reverse Mortgage is not the only option out there for the seniors who are in need of some cash. But it is definitely designed to tailor-suit them. For the people who don’t have a fixed source of income, the fact that there are no monthly repayments, might just seal the deal. It definitely has its own share of down-sides but it has its own advantages too. It just depends how it appeals to you and how well it suits your specific needs.