What is the real truth about reverse mortgages?

What is the real truth about reverse mortgages?

Most reverse mortgage borrowers use the funds for paying for basic needs in retirement. Reverse mortgages generally are not used for vacations or other “fun” things. The truth is that most borrowers use their loans for immediate or pressing financial needs, such as paying off their existing mortgage or other debts.

Are reverse mortgages good for seniors?

If you’re an older homeowner who plans to stay put, a reverse mortgage may be a sensible way to help fund your golden years. This is especially true for seniors whose spouses are also over age 62 and can be listed as co-borrowers on the loan.

How can I reverse reverse mortgage?

If you have a large balance that you are unable to pay in cash, the most common solution is to sell the home and use the proceeds to pay off the reverse mortgage. Another option is to refinance the loan into a conventional mortgage. Moving forward with any home equity loan is no small decision.

What can a reverse mortgage do for You?

A reverse mortgage is a type of mortgage loan that’s secured against a residential property that can give retirees added income by giving them access to the unencumbered value of their properties.

How many reverse mortgages are there in the US?

A reverse mortgage allows them access to ready, tax-free cash without selling their homes, and without the burden of monthly payments. The number of reverse mortgages has recently seen a phenomenal increase from 18,000 in 2003 to more than 107,000 in 2007 [source: U.S. Department of Housing and Urban Development ].

What happens if the value of a reverse mortgage exceeds the loan balance?

For example, if the last borrower left the home and the loan balance on their FHA-insured reverse mortgage was $125,000, and the home sold for $100,000, neither the borrower nor their heirs would be responsible for the $25,000 on the reverse mortgage loan that exceeded the value of their home.

When to use reverse mortgage for home equity release?

As a result, money can be tight, especially when unexpected expenses come up. A reverse mortgage or “home equity release” lets you borrow funds using your home as security. This means you can free up part of the value of your house without having to sell it.

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