Reverse mortgages for seniors enable homeowners to retire with the peace of mind that they can remain comfortably in their homes. Funded by the property’s value, lenders pay borrowers cash to spend as the borrowers so chose. It sounds almost too good to be true, which may leave you wondering how and when the other shoe will drop.
Due to their purpose, reverse mortgages for seniors do have an age minimum of 62 years that all co-borrowers must meet. The co-borrowers’ ages further inform how to budget withdrawals along with the home’s value and equity over the life of the loan. Some forms of debt, such as existing mortgages, do not affect qualification, but federal tax liens do. Other basic qualifications include meeting minimum HUD property standards and using the home as a principal residence.
The rest of the qualification process relies on your individual financial and credit history, much like with any other loan. Even if you meet the four federal requirements, your lender will be interested in your ability to pay taxes and keeping up with other homeownership responsibilities.
Living expenses do not necessarily drop just because you retire. Maybe you spend less on gas or eating out for lunch, but healthcare costs are likely to rise and can be as much as a second mortgage payment. If you still owe on an existing mortgage, those combined expenses paired with no full-time income become insurmountable.
Reverse mortgages for seniors, however, do not add to monthly living expenses. Rather, reverse mortgages can be used to finish paying off a mortgage or other debts, ultimately bringing down costs. Any equity remaining can be then saved as credit or used as tax-free household funds.
Now, for that other shoe: reverse mortgages are repaid when the co-borrower uses the home as a principal residence. This may be because you decided to sell or this may be left to your heirs to sort out. Still, the benefit of this arrangement comes in the form of securing independent living in your own home well into your retirement. To learn more about Reverse mortgages for seniors, contact Longbridge Financial today.