For thousands of retirees, how to pay for their daily living expenses without outliving their cash is the biggest worry. Financial advisors offer seniors annual asset liquidation plans, as a way to ease cash flow problems. While some retirees opt for the annual asset liquidation plan, owing to the seemingly attractive fees, for others, the HECM reverse mortgage is the best approach for generating income, while still keeping the property.
Is the reverse mortgage a good idea for the seniors? Is it really worth going for?
In this article, we feature some of the benefits from a reverse mortgage. Keep reading to find out whether the reverse mortgage is really a good idea, for retirees who choose to go that way.
1. No monthly loan repayments
A reverse mortgage allows retirees who are eligible to continue living in their home, even without making monthly loan repayments. The amount borrowed is only repayable when the borrower vacates the property for 12 months and above, or when they sell the property, to make the repayment. The homeowner must maintain the property, and keep the taxes and insurance current.
Considering that retirees have limited cash flow, affording monthly repayments on a conventional loan becomes stressful. Therefore, it makes sense for the retiree to opt for a more flexible finance plan, that does not require them to repay, considering that they are no longer earning a monthly salary.
2. Enjoy using the money on virtually anything
You have borrowed money against your own property, and there is no restriction on how to spend the cash. Therefore, retirees can choose to offset existing loans, or even fund their vacation using the borrowed money. In other words, the lender has no control over where you use the money.
Retirees who are looking for a way to finance their retirement life can borrow off their equity to afford the daily living expenses or even to pay for medical care. These funds are not considered income, allowing you to spend the whole amount on virtually anything you wish.
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3. HECM reverse mortgage can be a long-term solution to your financial problems
For a retiree to qualify for a reverse mortgage, they must show they have enough equity to secure the loan. In addition, you must prove property ownership. A reverse mortgage gives the borrower a reasonable lump sum, depending on the home equity left. If you have a large equity amount, this can be a good long-term financial solution.
To find out whether the reverse mortgage will address the cash flow problem on a long-term basis, talk to a reverse mortgage counselor near you. If they give you an indication that a reverse mortgage is a good plan, then go ahead and start the application process.
4. Protection against declining property markets
With the HECM reverse mortgage, you do not need to worry about property markets declining. Consider that the Federal Housing Administration secures the HECM reverse mortgage. Therefore, if at the time of selling to offset the outstanding amount, the property value is lower than the amount, no stress at all! The FHA secures the borrower against declining property market. Therefore, it is not your problem if the property market is on the decline.
DOWNLOAD OUR FREE REVERSE MORTGAGE PURCHASE GUIDE TODAY!
In 2006, the Federal Housing Administration (FHA) created the HECM For Purchase loan. This innovative loan program was designed to help seniors purchase a new primary residence using a reverse mortgage – all within a single transaction! Learn more by downloading our free guide!
5. Home purchase plan
If you are planning to purchase a property that suits your senior lifestyle, no problem. So long as your current primary residence has enough equity to finance the senior housing, then proceed and take the reverse mortgage. Alternatively, if you are still repaying the property mortgage that financed your home purchase, you can still borrow the property equity to offset the outstanding balance.
Before the introduction of a reverse mortgage, seniors had to pay cash for a new home. Lenders kept away from them owing to their income scenario. However, today, things are much easier for retirees, as they can purchase senior citizens property by borrowing against their primary residence. The reverse mortgage works perfectly if you are planning to renovate your current home.
6. Borrowers retain property ownership rights
The borrower will not lose the property ownership rights to the lender upon taking a reverse mortgage. Therefore, you do not need to worry about property ownership rights. Therefore, for retirees, the reverse mortgage presents a great opportunity to afford living expenses after retirement. Find a reliable lender and start the application process now.