Reverse mortgages a good option for retirees particularly in helping them to borrow money with the collateral of their own home. They are also known by the name home equity conversion mortgage (HECM). Retiring can be an extremely difficult process particularly because most of the income is cut-off this is why reverse mortgages are built to secure a better living conditions for retirees by helping them to cover the major expenses, especially healthcare costs. This article, we will delve into some of the benefits of getting reverse mortgage.
Home equity conversion mortgage loans are a safer option for retirees as compared to other types of mortgages. Initially, there were a few contentious issues about reverse mortgages but they were resolved and some of the deliberative changes makes reverse mortgages to be safer for retirees.
Some of the new rules particularly take care of surviving spouses as opposed to the older versions of the mortgage. It was in order rules that if the primary borrower passed away, then the spouse that was not included in the loan will lose the home. 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.
The financial assessments that take place in HECM loans also help to reduce risks. Even with home equity conversion mortgages, there are some housing related expenses that the borrower is expected to take care of themselves but even so, the financial assessment by the lender can be able to give them insight as to whether the retired senior can be able to take care of such expenses as property tax, homeowners insurance, HOA duties and the maintenance expenses, of which they can be able to step in if they do not have the ability to fulfil such financial obligations which in itself 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 benefit of reverse mortgages is that the proceeds of the loan are not taxable income. This therefore means that if a retired senior considers a monthly distribution or a lump-sum payment take care of the expenses, the money is exempt from taxes.
We can therefore put it out that there is no better option when it comes to housing retired seniors delegating the finances from reverse mortgages.