A reverse mortgage allows borrowers to pull the equity out of their home as a secure post-retirement plan. Meant for seniors at or above the age of 62, it is a solution that can help through retirement. It is important to clearly understand how does a reverse mortgage work and what are the key reverse mortgage benefits and drawbacks before you sign the papers. While it is easy to find this information at a bank, consulting a professional dedicated to this area is advised. If you want to consider this type of retirement planning, take a look at the top benefits of reverse mortgage here.
- You can Stay in Your Home and Improve Your Immediate Finances
- The Second Benefit of Reverse Mortgage for Seniors:
- The Tax-Free Benefits of a Reverse Mortgage Loan
- There is Limited Downside and More Benefits of Reverse Mortgage for Seniors
- You are Not Expected to Make Any Monthly Mortgage Payments
- Your Heirs are Not Affected by Your Debt
- The Loan Allows Flexibility
- Your Home Ownership is Not Affected
- You can Use the Funds for Paying off the Existing Mortgage
The key to a Reverse Mortgage is that it enables you to live in your home for as long as you want. And that too with absolutely no monthly mortgage payments! In many cases, you can also get access to the proceeds earlier for an emergency or for solving an immediate money problem.
You are Protected Even if the Housing Market Declines!
The federal government insures the RM loan. And that ensures a higher level of security. In the event that the loan ends up amounting to more than the value of your home when sold, government insurance shall cover the difference. And that means that the loan will be paid in full using only the proceeds your home sells for, and no more.
One of the most significant benefits of reverse mortgage is that the money you receive is exempt from taxes. While you will have to continue paying property taxes, insurance and other mandatory expenses as a homeowner, the proceeds from your RM loan are non-taxable.
As stated earlier, with a Reverse Mortgage/Home Equity Conversion Mortgage (HECM), you will never owe more than your home’s value when you repay the loan. So, there is minimum risk involved and better prospects for financially securing your post-retirement days.
One of the most charming benefits of reverse mortgages is that you receive payments for the entire duration you continue to live in your home. You have to pay it back only when you sell your home or move to another primary residence.
An RM is a “non-recourse loan”. Also, your children aren’t on the line for the debt if they opt out of it. In other words, your debts will never go on becoming a burden to your family in case of your demise.
Reverse Mortgage is a tremendously flexible product that you can utilize in a variety of ways. In case of a financial need, you can tailor the product to de-stress. You can also opt for a plan that allows you to use the money for healthcare, renovation, debt repayment, etc.
Repayment of an RM is required only when borrowed move, sell their primary residence or pass away. So, during your lifetime, you continue to own the property against which you borrow the money.
Another fantastic benefit of a reverse mortgage loan is that you can free yourself from any current mortgage expenses, as long as you meet the RM obligations. Since there are no monthly liabilities that RM loan demands of you, you have fewer things about which to worry!
Gathering more information about reverse mortgages will help you make an informed decision as to whether RM products are the right financial solution for you. Once you know about the reverse mortgage benefits and drawbacks are discussed with your financial advisor, you will get a clearer picture.
Different types of RM programs can help you maintain your independence and solve a cash flow problem if your retirement benefits cannot cover all of your expenses. However, it is vital to carefully review all the information available to you before deciding the RM loan as a final option.