Most seniors will have financial trouble because their income isn’t what it once was, and they can’t or don’t want to work anymore. However, it is possible to gain financial independence by using reverse mortgages. If you are considering this route, you should make plans to talk with other members of the family to ensure everyone feels comfortable with your decision. Your children or beneficiaries will be tasked with selling the home and paying off the loan, so it’s important they know this and prepare for it.
How It Works
Most people, both seniors and their families, are unsure of how a reverse mortgage works or why it can help. First off, it is considered a loan, so you shouldn’t think of it as free money. Someone will be paying it off though it probably won’t be you. In short, the equity of your home is borrowed against, and you are provided a loan, either in a large sum of money or monthly instalments. You can also get a line of credit or a combination of all three. You continue to own your home and can live in it, make changes and do what you normally do.
Repayment
Because of how it works, this type of mortgage is eye-catching to those who need more money to live comfortably. However, the repayment process is a little different than with traditional loans. You will still handle all the home’s maintenance, insurance and taxes and you will also have to comply with other loans that you may have. However, you don’t make any payments, and the loan is paid off in one sum when the last person on the title is gone from the home and it is sold.
Inheritance
Because most homes have two people listed as title owners, such as a husband and wife, when those two individuals leave or pass away. Therefore, you cannot give your house to another member of your family as an inheritance because it will be sold off to pay the loan back. If the money from the house is not enough, your children aren’t required to pay, and if there is extra money left over, it is dispersed fairly to the rest of your heirs.
The only way your family members can keep the house is if they repay the loan out of their pockets, which can be impossible to do on short notice.
Reverse mortgages are an excellent choice for many seniors to help them gain their financial independence. Visit Reverse Mortgage Finance Solutions today to learn how they can help.
