Reverse mortgage for seniors have seen an upswing in popularity over the last few years as families look for ways to ease the burden of fixed income living for US seniors heading into retirement. While often misunderstood by the media and seniors alike, a reverse mortgage provides a number of financial benefits as highlighted below:
How does a reverse mortgage for seniors increase cash flow?
Probably the main benefit when considering a reverse mortgage for seniors lies in the immediate cash-flow savings of no longer having a mortgage payment. Whether we want to admit it or not many Americans are woefully unprepared for retirement and the fixed income lifestyle it brings. Under a reverse mortgage, hundreds if not thousands could be freed up allowing seniors to pay down other existing debt or simply to increase their standard of living by traveling or pursuing other activities designed to increase enjoyment in their lives.
Editor’s Note: Click Here To See How Much You Would Receive With A Reverse Mortgage
How are reverse mortgage funds received by seniors?
There are a number of options available for seniors to receive funds disbursed through a reverse mortgage. The most common disbursement alternatives include partial or full lump sum, a line of credit, monthly payments, or a combination of these. This flexibility allows seniors and their families ways to most effectively plan the seniors’ financial future.
Under a reverse mortgage for seniors, who owns the home?
Another common misconception of reverse mortgages is that the lender becomes the owner of the home. This is categorically false. Home ownership remains with the original home-owner as long as the home owner remains compliant with all the terms of the loan and property taxes and insurance are paid.
Will Social Security and Medicare benefits be affected under a reverse mortgage for seniors?
Short answer is no. Government benefit programs that do not test financial resources (such as Social Security and Medicare) are not affected by reverse mortgages. Why is this? Because reverse mortgages are effectively considered loan proceeds, not income. However, other government benefit programs that do test for financial resources (such as Medicaid and Supplemental Security Income) may be affected.
How are the heirs of the borrower affected by a reverse mortgage for seniors?
When the senior that implements a reverse mortgage no longer lives in their house, due to selling, moving or death, the loan and interest of the reverse mortgage comes due and typically the house is sold at this point. If the house sells for more than the amount of the interest and loan, then the homeowner or their heirs will bank the difference. If the house is worth less than what’s due, the FHA as the insurer of the loan covers the remaining balance. Important to note, because a reverse mortgage for seniors is a non-recourse loan, the heirs are not responsible to pay a potential negative difference when the house is sold!
Editor’s Note: For More Information On Reverse Mortgages Click Here
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