If you're thinking about applying for a reverse mortgage, you must be aware of the facts it involves. Many people think of them as loans of last resort, but this isn't the case. That's why today, we will show you the main reasons to get a reverse mortgage so you can make the best decision.
1. You Wish to Keep Your House Instead of Selling It.
First of all, the reverse mortgage loan does not require the homeowner to sell his home before receiving money. The proceeds of a reverse mortgage can be used to pay off existing home loans, freeing up additional money for living expenses.
But keep in mind that timing is crucial. A reverse mortgage might lower your assets, even if you don't have enough to leave to your heirs. Your debt balance is increasing, and it is increasing over time. As a result, your heirs' properties will have less equity. The reverse mortgage is for persons who intend to remain in their houses for an extended period. If you decide to relocate, your lender will undoubtedly demand repayment and reuse of the loan.
2. You Wish to Support Your Retirement Years With a Home Equity Loan.
Another reason to get a reverse mortgage is to access your home equity. Reverse mortgages allow homeowners to borrow against their home equity, which is the difference between the current appraised value of the home and the balance of the mortgage. The homeowner is not obligated to repay the loan because interest is paid on income, which means that your debt will grow over time as the equity in your property is reduced.
3. Your Monthly Living Expenses are Too High for Your Income.
In the situation of being cash short, reverse mortgages also offer peace of mind. You can use the money to cover unforeseen bills if you need it. However, if you don't have enough money to meet the costs, you can use the funds to purchase a new home or refinance your current mortgage.
4. You Won't be Liable for Any Taxes.
Another reason for a reverse mortgage is its tax-free payouts. Unlike a traditional home equity loan, reverse mortgage funds do not accrue interest, so they remain tax-free for as long as you are a homeowner. These funds can help retirees make big-ticket purchases, such as buying a new car.
Although a reverse mortgage is not considered income for tax purposes, it may affect your eligibility for other need-based government programs such as Medicaid or Supplemental Security Income (SSI).
If these reasons mentioned above sound familiar to you, you may consider getting a Reverse Mortgage, and there's no better option than Reverse Mortgage CA. We offer different reverse mortgage refinancing options that will help you enjoy your retirement. Contact us today!