Reverse mortgages a good option for retirees particularly in helping them to borrow money with the collateral of their own home. Another name for reverse mortgages is home equity conversion mortgage (HECM). Retiring can be an extremely difficult process particularly because most of the income is cut-off this is why reverse mortgages are built to secure a better living conditions for retirees by helping them to cover the major expenses, especially healthcare costs. This article, we will delve into some of the benefits of getting reverse mortgage.
Home equity conversion mortgage loans are a safer option for retirees as compared to other types of mortgages. Initially, there were a few contentious issues about reverse mortgages but they were resolved and some of the deliberative changes makes reverse mortgages to be safer for retirees.
The fact that surviving spouses can be able to taken care of by reverse mortgages makes them to be superior than many of the mortgage options including, the previous versions of home equity conversion mortgage. Surviving spouses were not properly taken care of by previous versions of reverse mortgages as they will easily use the home if the borrower of their HECM loan passed away. FHA treatment necessary steps to prevent this from happening and therefore surviving spouses can be able to retain their homes even if they were not included as part of the HECM loan.
Home equity conversion mortgage loans also have lower amount of risk to retired seniors due to the amount of financial assessments that take place. It is required that the lender of home equity conversion mortgage comes conduct proper initial assessment before giving out loans and in the case where the borrower cannot be able to meet other financial obligations that relate to housing expenses, then the borrower will have to take care of it and this makes reverse mortgages to be safer.
Another benefit of home equity conversion mortgage is that you’re able to secure housing at a lower cost or no cost at all. It is proven by research that retired seniors account for it a third of the total monthly income going to housing expenses which therefore means that reduction in the costs or eliminating the costs completely is a huge money saver for retirees.
Due to the fact that the loan proceeds when it comes to reverse mortgages are not subject taxable income is very promising for reverse mortgages. This therefore means that if a retired senior considers a monthly distribution or a lump-sum payment take care of the expenses, the money is exempt from taxes.
The safety of reverse mortgages is outspoken at the bottom line is that they are the best option for retired seniors when it comes to housing.