The economic crisis makes it difficult for some families to make the ends meet. This is especially harder for those with no income and is just supported by pension or Medicare. How will you survive with no monthly salary, as the medical bills pile up as is inevitable with age?
Reverse mortgages are the popular choice since it needs no proof of income to be approved. However, before you should decide to take it, it is important that you study the pros and cons of a reverse mortgage to make sure you’re getting the best out of the deal.
The major requirements for this loan is an age bracket of 62 years old and above, and the applicant should have a property. The loan could be given in fixed monthly payment, a lump sum, a line of credit, or a combination of these.
It does not require monthly repayments, but would have to be settled in full amount once the borrower dies, sells the property, or moves out of the home. The older a borrower is, the higher the possible loan might be. This also enables the borrower to cash in on the equity of his home and be able to use the money for his own devices. Reverse mortgages pros and cons outweigh each other, and it is a wise move to study really it before signing the deal.
Reverse Mortgages Pros and Cons
Reverse mortgages have no income restrictions and do not require an income check when applying. No monthly repayments and an elderly could apply even if he is on social security. These benefits make it easy for those who have no income to provide for themselves during their golden years. This type of mortgage is not for those who wish to sell their homes.
One of the disadvantages of reverse mortgages is that the property should be sold off to repay the loan. When the due date comes, the borrower or his inheritors will have to settle the full amount in a month to keep their home. If they are unable to settle the debt, then the lenders will possess the property. Find out more tips here.
Aside from this, there are several processing fees needed to ensure that the application would be approved, which is about 5% of the whole loan. Moreover, if the home is already mortgaged upon application, then the original debt should first be paid, either by the applicant’s personal money or a deduction from the loan.
Thus, reverse mortgages pros and cons should both be considered before deciding on it. There might be other viable options for your situation. Once you do consider that you’ll opt for this loan, then you’ll be set for life – as long as you don’t move out of your home.
Find out more information: http://www.investopedia.com/articles/personal-finance/091614/