There are many reasons you may want to take a reverse home mortgage. For most people, it is a good way to increase their financial wellbeing in retirement. You may still take reverse mortgage in Palm Desert even if you are not retiring. If the benefits outweigh the disadvantages in your situation, it can be the right decision to take.
What is Reverse Mortgage?
Reverse mortgage is a kind of loan that allows homeowners aged 62 and above to convert real estate equity to spendable cash. It is a sort of refinancing that doesn't come with the burden of monthly mortgage payment. You will need to qualify for it before you can access this unique loan.
What are the Benefits of Reverse Mortgage?
For those who qualify for it, reverse mortgage offers a number of benefits. Here are the most significant ones:
Flexibility in Disbursement
Reverse mortgage offers flexible terms when it comes to how homeowners can access the loan they qualify for. Depending on your needs, you can choose to collect the fund in the form of a large sum, or you may decide to withdraw smaller amounts in batches. It can be a great financial planning tool.
Since it is treated as a loan, the money you get from a reverse mortgage will not be taxed. It doesn't matter how you access the money. That means you will not have to pay tax even if you received the money as a lump sum. You will have the full money and use it as planned.
No Monthly Mortgage Payment
For most people, this is the major attraction for taking reverse mortgages. As long as you live in the house you borrowed with its equity, you are not required to make monthly mortgage payments, which is the exact opposite of what obtains with a traditional mortgage. The loan will only have to be repaid when you sell the home or move to another primary residence. However, you are still responsible for home maintenance, property taxes, and homeowner's insurance.
You Remain the Owner of the Home
This is probably the biggest benefit of reverse mortgage. While you have used your equity in the home to take a loan, you are still treated as the owner of the home. As long as you live in your home and comply with the terms of the loan, you are still the legitimate owner of the home and will be treated as such by the lender.
Protection during Housing Market Decline
Reverse mortgage is insured by the federal government, and there is no chance that you will owe more than your home value. Even in the face of market decline, you are fully protected. Even if the home eventually sells at a price that is lower than what the lender has paid you, the home will be paid in full only from the proceeds of the sale.
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