A reverse mortgage, also known as a “reverse mortgage”, is a loan program, typically secured by residential real estate, which allows the borrower to take the value of their home and access the outstanding property value on an unsecured basis. The loans typically are marketed to senior citizens and usually do not need monthly mortgage payments either. In general, the interest rate for a reverse mortgage, especially one that is for people over 65, is much less than the interest rate for a regular mortgage, but there are some exceptions depending on the particular reverse mortgage provider. The borrower must be 62 years of age or older and have a good credit rating to qualify. You can learn more at this website.
When a borrower makes a reverse mortgage, they use their equity in their home, usually less than 30% of the total home equity, to make up the difference between what they would pay for a traditional mortgage on the home and what the lender is offering. This equity can be accessed either to pay down the debt or to pay off other debts. Some homeowners choose to pay off their mortgage early and move to a lower priced rental home or equity-based rental property, while others use the equity to pay off all of their credit card debts. The choice of whether to pay off the home equity with cash and move on with your life, or to pay down debt through a loan will depend on how the debt was incurred and how much equity is left over.
While reverse mortgages offer many advantages to seniors and their families, it can have certain disadvantages as well. For example, these loans are not usually refinanced for a period of time in order to use the extra money. However, there are several options available for reverse mortgages to help seniors and their families access additional funds in the event that their current finances prove to be too tight to be able to make the monthly payments on their home equity loan. Most seniors and their families are unaware of these options. In any case, reverse mortgages can provide some much needed financial relief for those seniors and their families who are facing financial difficulties and need a little extra money every month to ensure they can maintain their current lifestyle.