Reverse Mortgage Info
The golden years of life are supposed to a be a time for individuals to pursue their lifelong dreams and travel at their leisure. Unfortunately, most older Americans are finding their golden years to be financially challenging and anything but golden.
According to the National Council for Aging, around 75 percent of 65 year olds on social security depend on it for most if not all their monthly income. In addition, there are now over 23 million Americans over the age of 60 who are living at or below the poverty level. These statistics reveal the financial challenges that many of the older generation face on a day-to-day basis. A reverse mortgage is a possible solution to address this issue, here is some reverse mortgage info:
What is a reverse mortgage?
A Home Equity Conversion Mortgage (HECM), which is more commonly known as a reverse mortgage, is a specialty mortgage designed for individuals 62 years of age and older, who have adequate equity in their homes. This type of mortgage was created to help retirees who are on a limited income. The loan is referred to as a reverse mortgage because the traditional mortgage payback system is reversed in these particular loans.
How does a reverse mortgage help seniors?
A reverse mortgage is beneficial to seniors because it gives them additional income for as long as they remain in their home. Therefore, this type of mortgage can create a whole new life for seniors who were previously financially strapped.
Can retirees still qualify for a reverse mortgage if they have a current mortgage on their home?
Yes, individuals who currently have mortgages can still qualify for a reverse mortgage. However, the house must have enough equity and the mortgage must be in the first lien position. Many seniors use proceeds from a reverse mortgage to pay off their current mortgage. Others pay off their mortgages with savings or other avenues.
How does this work when a current mortgage is involved?
For example, if an individual owes $100,000 on their existing mortgage and is qualified for a $125,000 reverse mortgage, they could pay off their existing mortgage and have $25,000 to spend as they wish.
Will acquiring a reverse mortgage alter government benefits?
Most senior citizens benefit from government programs such as Medicare and Social Security. A reverse mortgage will not impact these particular programs, while individuals who have Supplemental Security Income (SSI) will have to use the proceeds from their reverse mortgage immediately. Individuals who obtain SSI will have to spend all their reverse mortgage proceeds within a month’s time or the funds will be considered an asset. If the amount that remains in a couple’s account is above $3,000, individuals can be ruled ineligible for Medicaid.
How are proceeds paid?
Retirees who acquire a reverse mortgage can choose to receive their payments in either a lump sum or as fixed monthly payments.
How much money can individuals get from an reverse mortgage?
The amount of funds that an individual can receive depends on many factors, including their age, the value of their home, current interest rates as well as any specific lending limits by the lending program.
How can the proceeds be used?
One of the benefits of a reverse mortgage is the fact that the proceeds can be used for virtually anything, which includes daily living expenses, supplemental retirement income, to pay off existing debts, pay property taxes or used as funds to repair the home.
Is there any time a reverse mortgage is unwise?
Experts recommend seniors who do plan on moving out of their home within the next two to three years not acquire a reverse mortgage. In other words, only homeowners who plan on staying in their homes for a substantial number of years should consider a reverse mortgage.