Many times over the last few years, we've heard the term "reverse mortgage" used. News reports, commercials, and advertisements on the web all tout the benefits of having a reverse mortgage loan. While nearly everyone in the U.S. has heard the term, many people still are not familiar with what it is, or how to approach getting one.
Reverse mortgages for seniors are special types of home loans, designed with senior citizens in mind. They're only available to those citizens who are over the age of 62 years old, and are designed to help them save money while living in their home. The way reverse mortgage lenders help a senior is to make it possible for them to not be forced to pay on their home loan, for as long as they live in the home. The reverse mortgage accrues interest, paying the homeowner's payment, unless the homeowner passes away or moves away for a time period of 12 months.
Many homeowners don't know they qualify for a reverse mortgage, and this is partially due to the common misconception of these special loans only being available to people who have paid off their existing home loans. While you may not have outstanding debt on your home while you have a reverse mortgage, there are ways to prepare for applying for a reverse mortgage loan, even if you still owe on your home.
In order to be granted this special loan, you must first pay off the existing mortgage on your home. There are several ways to go about this. Your first option would be to pay the loan out yourself, before applying for a reverse mortgage. This option, while it's financially the best one to choose, isn't always feasible for many reverse mortgage for senior applicants. Many people who are interested in receiving a reverse mortgage are on fixed incomes and must manage their money carefully, thus inhibiting their ability to pay off their existing mortgage or home loan.
For those persons who are unable to pay off the existing home loan on their property, there's another option available. This option is to take a reverse mortgage loan in a lump sum payment and use it to pay off the existing home loan. The advantage of this would be the ability to live in your home, while not having to meet the financial responsibility of making a monthly payment. This extra amount of money, which is left over from not having to make your loan payment each month, can then be used in other areas of your life to improve how you live.
Once you've paid off your existing mortgage or worked with your reverse mortgage lenders to arrange for them to pay it out, you'll no longer have to worry about making the monthly payment on your home. This could benefit you greatly in many areas of your life, as you would then have more operating capital, to spend as you please.