Some people say that parents don’t need to save up for their kids’ college education. There are college loans to help them but their parents can’t find a loan that will help them live a comfortable life after retirement. But, wait for a second. Are you sure there’s no loan for that? Isn’t reverse mortgage loan the perfect option for seniors?
Reverse mortgage loans is comparable to a line of credit or loan against your home equity. One main difference is that the lender will pay you and not the other way around. Through a reverse mortgage, you will have the cash you need to supplement your retirement funds like the benefits you get from social security.
An HECM is a well known reverse mortgage type, which represents around 90% of the total number of reverse mortgages.
The house is one asset that seniors tend to forget. They often neglect to include them when planning for their retirement. Reverse mortgage loans are good ways of making the most out of the equity of their house to pay for retirement costs while not having the need to give up their house. Reverse mortgage loans may be a good option for those who are considered to be house rich but cash poor.
Who Can Get Reverse Mortgage Loans?
People who are at least 62 years old and own a home can apply for reverse mortgage loans. In case there is an existing mortgage on the house, the remaining balance should be small that it could be settled using the money you get from your reverse mortgage Myrtle Beach. The house which you are taking your loan against should be your primary residence. It is also important that you are not delinquent on debts like federal student loans or federal income taxes.
What Are Your Financial Obligations?
The borrower of the reverse mortgage loan needs to be responsible for maintaining the house, paying the HOA dues, property taxes, utility bills, flood insurance, and the homeowners insurance.
How Much Can You Get?
The amount that you will receive will depend on the younger borrower’s age, the HECM FHA limit, and appraised value. The proceeds of the loan increase with the borrower’s age and decrease if the interest rates are higher.
In case the spouse of the borrower is less than 62 years old, the spouse won’t be eligible to become a borrower. But, the proceeds of the loan would be based on the younger age of the spouse, so the spouse could stay in the home following the death of the borrower, in case the borrower passes away first.
A reverse mortgage loan is generally limited at 50 percent of the equity of your home. The reverse mortgage loan applicant could borrow over 50%, in case the proceeds of the loan are utilized to settle their existing mortgage.
How Will You Get The Money?
In case you’ve been given a variable interest rate, then you can get the funds as a credit line, lump sum or as level payments for as long as you reside in the house or as level payments for a fixed term. If you’ve been given a fixed interest rate, then the money will be given to you as via lump sum.
Interest will be charged on how much you get, after you receive it. Because you don’t make regular payments unlike a conventional mortgage, you can expect the interest to pile up and compound, which means it will eat into the equity of your home.
Is The Loan Taxable?
Since it’s just like getting an advance on the loan, the money that you get from your reverse mortgage loan is not taxable. Given that, reverse mortgage loans doesn’t affect Medicare or social security benefits. But a reverse mortgage could have an affect on your public benefits like Medicaid and SSI, if you just save and do not spend the money you get from the loan.
Consult with Reverse Mortgage Specialist now and find out if this type of loan is the perfect option for you as part of your retirement planning.