Reverse Mortgages For Senior Citizens

Posted on August 20, 2008
Filed Under Reverse Mortgage |

If you are a senior and have trouble living on your fixed income then you may need to consider utilizing a reverse mortgage to help with the ever growing cost of living. If you are like nearly all individuals living on a fixed income because the prices of food and gas are making it increasingly difficult to enjoy the life style you projected for during your retirement. Many are considering acquiring a part time job to help with cost only this can have a negative impact on your social security income and your tax returns as you may end up owing taxes at the end of the year.

With reverse mortgages nonetheless you can get access to extra money and it will not negatively touch your current financial situation. This type of mortgage is easy to qualify for and can help get you back to living in the style you had hoped for. Many consumers wonder what the difference of opinion between a reverse mortgage or a home equity loan is here is how each works:

Reverse mortgages, plainly put, permit you to apply the equity that you have in your home without expecting to make monthly payments. A home equity line of credit also grants you access to your equity; nevertheless you will need to establish payments each month on the sum that you borrow.

There are other factors that you should also consider. For example with a home equity line of credit you need to show proof of income to your lender in order to qualify whereas with the reverse mortgage you do not need to as the lenders will get their money back when you or any one on the deed are no longer living in the home.

So, do you qualify for this type of loan? There are only a a couple of qualifications that you must meet to be eligible. First, you and anyone on the deed must be at least 62 years old. Next, you must own the property outright or you may experience a really small mortgage left on the home. This property must likewise represent your primary residence and you need to be living there. This is all you need to qualify for this type of loan.

Once you qualify you can obtain your money one of several ways. You can obtain a lump sum payment, you can choose to experience set monthly payments, or use a line of credit option. The crucial matter to think of with this type of loan is that you will never be tossed out of your home. The lender will hold off until everyone on the deed is no longer living in the household to collect their fees, principle and interest.

There are a few negatives that you may also want to consider and those are higher interest rates, and higher fees. Since you are not producing any monthly payments on the loan and the lender may need to hold off years or potential decades to get repaid, they more often than not charge more such interest than some other types of mortgages. The closing fees are also more money than a typical closing maybe.

So if you notice yourself having to really work at it to make ends meet, are at least 62 years old, and own your home, you should consider a reverse mortgage. Having this extra income can help you to retain the same life style and as most analysts will tell you that by the end of 2008 gas prices, on the national average, could be $5 or more a gallon let alone the increase in food prices.

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