Most Common Uses Of A Reverse Mortgage

Reverse mortgages have become a very popular option for senior citizens. They are so common because it gives the homeowner the freedom to use the proceeds of the loan for whatever they choose. Because the homeowner has total control on how to use the proceeds of the loan, there are many different ways in which reverse home mortgages are being used.

We have included in this article some of the most common ways in which people are using reverse mortgages. Of course, there are many more ways in which you can use the money from a reverse mortgage.

Reverse Home Mortgages and Long Term Care

Many senior citizens are finding themselves in a position where they have to discover diverse ways to finance their long-run care due to the raising fees in health care. Many seniors have chosen a reverse home mortgage as a manner to fund their healthcare fees. They spend the revenue to pay for the current monthly fees or a long term care premium.

The proceeds they receive from the reverse home loan allows some senior citizens to guarantee the type of health care they deserve for as long as they needed. This is so because the FHA insurance makes sure that homeowners keep getting monthly payments for as long as they live in the house.

The money you get from a reverse home mortgage is tax exempt. Also, depending on your financial situation, your social security and Medicare benefits are usually not affected by the money you receive from the seniors reverse mortgage. To make sure, it is a good idea to talk to your CPA, ask your reverse mortgage broker or ask the counselor you are entitled to when applying for a reverse mortgage.

People use a reverse mortgage to pay for health care in one of several ways:

– To pay for unexpected or emergency medical expenses

– To pay for the monthly medical bills

– To afford the long term care insurance premium

Reverse Home Mortgage and Stopping Foreclosure

Home foreclosures are at a record high because of the current economical conditions. Foreclosures have had a direct impact in the whole society affecting all types of homeowners. Many seniors have turn to reverse mortgages as a way to protect themselves from the chance of losing their homes.

By using a reverse home loan, a senior citizen facing foreclosure on his home can turn the tables around. Instead of having to make monthly payments, the homeowner can receive monthly “income” from the bank. When you get the mortgage, the foreclosure mortgage can be paid off and the home taken off of the foreclosure procedure.

Finally, a seniors reverse mortgage can work as shield for you. As long as you live in your home, you can never be thrown out of the house. Your only responsibility is to keep the real estate and insurance payments up to date.

The main drawback to a reverse home mortgage is its high fees. Nevertheless, if you compare these fees to the possibility of losing your home, it can be well worthwhile.

Even though you can stop foreclosure by applying for a reverse mortgage, it’s advised that you talk to a professional reverse mortgage broker before choosing this alternative. A good broker specializing on reverse home mortgages should be able to tell you if this is a viable solution for you.

Reverse Mortgage as a Way to Fund Your Retirement

Some seniors are finding it hard to maintain a lifestyle they have grown accustomed; especially with the increasing life expectancy. Some are turning to reverse home mortgages to help them fund their retirement years. With a reverse mortgage, you can choose to receive monthly payments from a bank. In many cases, this funds work as a second income.

Seniors reverse mortgages work by making use of the equity in your home. You can choose to use the equity in the house by receiving a lump sum or monthly payments. Contrary to a traditional home loan, in a reverse mortgage, the bank pays you. Of course, as you receive payments, the equity in your home decreases.

For people using a reverse mortgage, the funds they receive can be used as a second income. There is no limit on the different ways you can se the money.

Also, by getting a reverse mortgage you avoid having to spend your cash in making monthly payments which in turn increase your cash flow. You can save the money you avoid paying to the bank and use it as an insurance policy.

Of course, before choosing a reverse home mortgage, talk to an experienced reverse mortgage broker specializing in this type of mortgages. In addition, if you choose a FHA insured reverse home mortgage, you are entitled to a free third-party counseling session where you can ask any questions you may have.