Here’s Why You Should Consider Reverse Mortgages
Here’s Why You Should Consider Reverse Mortgages: A reverse mortgage is a special type of home loan that allows borrowers who are at least 62 years old (and meet other eligibility requirements) to convert a portion of the equity in their homes into cash. It does not require monthly mortgage payments. This is an incredibly useful retirement tool. Refinancing your mortgage can save you hundreds of dollars a month and potentially thousands of dollars over a standard 30-year home loan.
Though they were once considered a last resort for older homeowners, they have become a useful tool for individuals planning for retirement.
Who does this benefit? Homeowners who do not plan to move can benefit from a reverse mortgage because, in order to qualify for a reverse mortgage, the homeowner must reside in the home. Reverse mortgages can also benefit those who cannot afford the cost of maintaining their home. A reverse mortgage is a great way to use the money that was put into the home in order to renovate or maintain the home so that it will increase in value. Homeowners pour money into their home for years and they have every right to use it. Also, reverse mortgages can be used by homeowners who want to use the money for an investment with the help of a self-directed IRA. This can generate more income for the homeowner that can then be put back into the home.
Though reverse mortgages can be extremely useful to homeowners, it does have its pros and cons.
- No monthly payments.
- Debts can be paid with proceeds.
- Proceeds can be used to pay off the existing mortgage.
- Improves monthly income.
- Fees and closing costs can be high.
- Borrowers must complete reverse mortgage counseling.
- Homeowners are required to maintain the house.
- Individuals must pay property taxes and homeowners insurance.