The new wave to financing a home, reverse mortgages, has people wondering. Just how beneficial is this program? Can a Reverse Mortgage Change a Life? Before answering that question, we must first understand what a reverse mortgage is and its criteria for approval.
What Is a Reverse Mortgage?
A reverse mortgage is a Department of Urban Development(HUD) approved loan to seniors of 62 years of age or older. It allows the homeowner to borrow money against the accrued equity in the home. The homeowner is free to use the funds as they wish, where there are stipulations with some other loans. It is typical however, that the loan is usually requested to provide for extra income to the homeowner aside from government assistance.
Benefits of a Reverse Mortgage
Having a reverse mortgage comes with many benefits over a conventional second mortgage. These benefits had been designed to relieve seniors of financial pressures as they have many other significant worries, like health. It also relieves the homeowner and his/her heirs of any debt owed if the homeowner shall pass away and there is a remaining debt after the house has been sold. Other benefits to a reverse loan, with relation to traditional home equity loans are as follows:
-home equity loans are to be paid back immediately where reverse mortgage loans are deferred as long as the homeowner or its heirs remain living in the home.
-interest rates are much lower with reverse mortgages over home equity loans. caution: reverse loans have much higher up-front costs.
-reverse loans usually require no credit check or a very high score-if required.
-reverse loans do not require the homeowner has a certain amount of income to qualify.
So if the question still remains, “Can a Reverse Mortgage Change a Life” With the many benefits that come with reverse mortgage, it is clear to see that a reverse mortgage can be very life changing.
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