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What is a Reverse Mortgage and How Does It Differ from a Traditional Mortgage?

By Edited Feb 27, 2016 0 0

traditional vs reverse
Credit: www.seniorreversemortgage.com

One of the things people still frequently ask reverse mortgage lenders is “How do reverse mortgages work?” Although reverse mortgages have been around for years, it isn’t until later in life that people start to look at the potential benefits of reverse mortgage for seniors. Too often, seniors are carrying a heavy financial burden from medical bills and other necessities that they simply can’t do without. For those who are still paying on a mortgage for their home, a reverse mortgage can put control of their finances back into their hands. Not only does this take away the worry about paying their mortgage, but it also gives them more money to pay for other essentials.

With a traditional mortgage, a person makes payments to the bank each month in order to retain possession of their home. With a reverse mortgage, the person no longer pays their mortgage payments, but they receive money for the equity they have built up in the home. In addition to there being no monthly payments with reverse mortgages, the person is not required to have an income or have maintained a specific credit score rating in order to qualify. Reverse mortgages for seniors are designed for those who need financial relief and no longer have a source of income. Since it is based on the value of the home, the person will never owe more than the home is worth.

Many people are concerned over reverse mortgage costs and whether there might be disadvantages that they are not aware of. When looking at reverse mortgage companies online, choose one that has a reverse mortgage calculator. This will help you determine how much you can get with a reverse mortgage for seniors on your home. Some companies also offer instant reverse mortgage quotes so that you can know in a matter of seconds how much your home might be worth to you.

One thing to keep in mind when considering the pros and cons of reverse mortgages is that you will continue to be able to live in your home, even after you have taken the reverse mortage.  If you are planning to move or sell your home within a short period of time, the reverse mortgage costs will probably mean a reverse mortgage isn’t the right choice for you. 

You don’t have to evaluate the pros and cons of reverse mortgage alone. Reverse mortgage companies are required to provide you with reverse mortgage counseling before you receive a senior mortgage to ensure you make an informed decision.  It is important for you to understand the pros and cons of reverse mortgages and also to have knowledge of any other options available to you.

While a reverse mortgage can provide you with the cash you need for medical expenses, taxes, or upkeep on the home, you will be able to reside in your home for the rest of your life as long as you meet the requirements. These include having at least one of the borrowers residing in the home full time, insurance and taxes are kept current, and any needed repairs are made.

Be sure that you understand the reverse mortgage rates on your senior reverse mortgage and what your reverse mortgage cost will be. Learn if a reverse mortgage is the right choice for you so that you can make the best possible choice for your needs.

 

 

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