Whether you currently are a senior citizen or are approaching that age, how are you doing financially?
Unfortunately, many senior citizens find the economic conditions across the nation in 2015 a tad challenging. For those that do, making monthly payments on mortgages or rents, health insurance, utilities and even daily food necessities can be quite challenging.
When it comes to their homes, many seniors have invested decades of time and money in order to set themselves up for years of happiness.
So, what are some options for them if today’s times are proving to be more difficult than originally thought?
Where Will the Money Come From?
For some seniors, turning to a reverse mortgage could be the financial answer they’ve been looking for.
One of the first questions they may ask themselves is how does a reverse mortgage work?
To simplify matters, a reverse mortgage can be the financial tool that you need to get you over the financial hump.
Some factors to keep in mind with reverse mortgages:
- Qualifications – Reverse mortgages are financial options for those senior citizens over the age of 62 and who do not have financial liens against their homes. The residence needs to be owned minus any prior existing liens, and also be able to be sufficient from a reverse mortgage. In essence, a good financial track record can certainly work to your benefit, while any past or current financial issues can prove problematic;
- Borrowing and distribution – There is no exact monetary figure as far as how much can be borrowed without research of your current financial situation, your current age, and of course how valuable your residence is. If you are approved on a reverse mortgage, the loan amount may be farmed out several ways. You might get the money in the form of monthly installments as long as you maintain residence in the home or you may receive monthly payments that will only occur for a set period of time;
- Homeowner passes away – In most cases, the reverse mortgage loan must not be reimbursed until the final remaining homeowner either dies or moves out of the residence. When that occurs, the loan is then tied to the estate, with survivors given a minimum of six months to complete paying off the loan or putting the home up for sale to cover the reverse mortgage loan costs;
- Applying the reverse mortgage – Senior citizens oftentimes will use a reverse mortgage for a variety of things. Some of these include having extra finances for home repairs, paying down property taxes, or even using the funds for medical expenses. In the first case, putting some or all of the money towards home repairs can be beneficial on a couple of fronts. One, it makes the value of the home over the long run increase when the home’s maintenance is kept up to date. Two, it can also keep the individual/individuals in the home longer, allowing them more comfort and possibly delaying moving into a seniors’ center, a nursing home, or even with family.
If a reverse mortgage is something you’ve been mulling over recently, do your research and get the facts to see if you should come home to such a loan.