Reverse Mortgage in Pennsylvania
Senior citizens in Pennsylvania who are retired or soon to be retired may wonder what financial resources await them in this new phase of their lives. They may have healthy pensions in place and be ready to claim Social Security benefits. However, they may also want another source of money that will allow them to use live comfortably without the fear of going broke or being homeless. Rather than use their credit cards or take a part-time job in their retirements, seniors in this state could use one of the most valuable assets in their possession. They can add money to their retirement savings by using their homes to secure a reverse mortgage.
Learning about Reverse Mortgages in Pennsylvania
Like other states, Pennsylvania offers a wealth of information about this type of financing to seniors. People who are unfamiliar with reverse mortgages are encouraged to contact one of the state’s leading financial agencies to find out more before they apply for this loan. Some of the more notable agencies in the state that can provide assistance include the Pennsylvania Department of Banking and Securities, the state’s Housing and Urban Development agency, and the Pennsylvania Attorney General’s office. They can also contact AARP and other senior citizen advocate groups to ask questions.
Senior citizens can also feel more confident about the application process when they learn about the state’s Truth in Lending Act. Also known as the right to rescission, this act allows applicants to change their minds and exit the reverse mortgage within three days after signing the contract. This assurance helps Pennsylvania senior citizens make informed decisions and avoid being coerced into a financial agreement that they could regret later.
When they have all of the facts made available to them, retired homeowners may come to appreciate the notable benefits of this type of loan. For example, they can enjoy easier income and credit guidelines than if they were to apply for a traditional bank loan. Because the loan is based on a home’s equity, people may not need to comply with rigorous credit standards and high income requirements found with other lenders.
Likewise, the funds from a reverse mortgage cannot be counted as income, as technically the money comes from a loan. With that, seniors can receive monthly or lump sum payments and avoid worrying about becoming ineligible for Social Security or Medicare. They also do not have to claim the money on their tax returns, as the funds are not taxable.
Senior citizens in this state also may appreciate the fact that they can remain living in their homes without being required to make payments on the reverse mortgage. In fact, the terms of the loan stipulate that once the loan’s owners no longer live in the home, either from passing away or relocating elsewhere, the home will then be sold to satisfy the repayment obligation. Seniors avoid having to make expensive payments that they otherwise perhaps could not afford. They also avoid the worry that the bank will foreclose on them or that they will be homeless.
Restrictions of Reverse Mortgages
Even so, seniors should also be aware of some of the restrictions that come with this type of financing. For example, the reverse mortgage must be the primary lien on the home, and people cannot take out an other line of equity against their house. They likewise cannot will the house to their family. After they pass away or move, the house will be sold. However, any remaining equity after the sale could then be given to their next of kin.
Pennsylvania retirees have a variety of information resources available to them when it comes to learning more about reverse mortgages. They can find out how this line of financing can make their retirements more comfortable.