Reverse mortgage programs help retirees who are facing economic hardship gain access to the equity in their homes. They can use the loan as a second source of income and as a means to achieve their goals. Though this mortgage product is associated with high costs, regulation has allowed it to be a valuable tool for seniors looking to save their cash flow. Below are the other benefits associated with it:
Access to cash
If you have little or no retirement savings, a reverse mortgage can help with your cash flow problems. The money can help you pay your debts and even improve your lifestyle. For those who do not have cash flow problems, the program provides you with extra cash that you can use to travel or pursue other dream activities.
No monthly mortgage payments
This is one of the major advantages of this program. Payments are made to the homeowner. Other loans require you to pay monthly payments. However, the reverse mortgage loan is repaid when you sell or move from your home. The only payments expected from you are home maintenance, property taxes, and homeowners insurance fees.
Your home belongs to you
Most seniors are made to believe that once you take a reverse mortgage, the lender acquires ownership of your home. This is far from the truth. If you comply with the loan requirements, pay your homeowner insurance and property taxes, you remain the homeowner.
You are protected in case of house market decline
The federal government is the insurer of the reverse loan. This gives the loan a reliable security. If your home fetches less than the value of the mortgage, the insurance from the federal government will offset the difference. You will not need to look for extra money to offset the remaining balance; only the proceeded from your home sale will be required.
Retirement today can last longer than 20 years, which can deplete retirees’ cash flow. A reverse mortgage loan is one of the most misunderstood programs and yet seniors who know how it works confess that it gives them the peace of mind they need to enjoy their retirement.