Pros and Cons of Reverse mortgage
Once, retired you need to supplement your income for fulfilling all the daily needs. You start looking for financing sources, which can offer you a solution for this. Reverse mortgage comes as a solution to this.
Gone are the days when you could buy whole lot of things in just few pennies. The era of inflation has changed the whole scenario. Every one wishes tension less and hassle free post retirement life. For this you try to save as much as possible, while making both the ends meet. But with the increase in the cost of living, not always you succeed in making good savings for oncoming future.
Once, retired you need to supplement your income for fulfilling all the daily needs. You start looking for financing sources, which can offer you a solution for this. Reverse mortgage comes as a solution to this.
A Reverse Mortgage is a special type of mortgage that enables the seniors to convert the equity in their homes into cash or monthly income. The money from a reverse mortgage can provide elderly homeowners, with the financial safety they need to fully enjoy their retirement years. It is an arrangement whereby homeowners get cash ( usually in the form of monthly payments or a lump sum ) in return for a mortgage on their home, which is used as security against the loan. It is also known as reverse annuity mortgage and home equity conversion mortgage.
There are two types of reverse mortgage. They are;
1. Home equity conversion mortgage.
2. Fannie Mae home keeper mortgage.
Advantages of Reverse Mortgage:
a. Help you maintain your financial independence and inadequate standard of living.
b. Allows you to remain in your home and retain ownership.
c. The money, you receive from it is tax-free.
d. This product is usually attractive to older homeowners, who have accumulated substantial equity in their homes.
e. Unlike an ordinary mortgage, which involves payments by the borrower to the lender, a reverse mortgage involves payments by the lender to the borrower.
Disadvantages of Reverse Mortgage:
a. Their options can be numerous and confusing.
b. Are more costly to set up than other types of loans.
c. only those who are in their 70s and 80s can derive benefits of this type of mortgage financing.
d. It is more expensive than traditional loans. The cost of obtaining reverse mortgage can be very high.
If you have any other queries related to mortgage, feel free to visit this site.
External resources:
1. http://www.mortgagekb.com/mortgage-term.html
2. http://www.mortgagekb.com/discount-rate.html
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