Reverse Mortgage: How It Works And How It Can Benefit You

Reverse Mortgage: How It Works And How It Can Benefit You
By [http://ezinearticles.com/?expert=Joey_Bossman]Joey Bossman

Reverse mortgages have made the subject of numerous controversial discussions, both among experts in the field, and seniors interested in making the most of their homes and ensuring their retirement plans. However, people's reluctance to this type of products is often generated by the lack of accurate information. The aim of this article is to provide you with relevant information about the mechanism of reverse mortgages, as well as the benefits they can generate.

How does it work?

A reverse mortgage can be defined in terms of a special home loan, especially designed for seniors aged at least 62, that allows you to borrow money against the equity of your home and transform it into cash you can dispose of in emergency cases or unexpected business opportunities. In simple terms, unlike conventional mortgages which require monthly payments from the homeowners' part, a reverse mortgage basically transforms the property itself into a steady income source.

Which are the benefits?

Misinformation and the fear factor often prevent elderly homeowners from benefiting from the equity in their house, an equity they have been building over time by paying their mortgages. Many seniors are not aware of the fact that a reverse mortgage doesn't imply a title transfer. That means that they will not only retain the ownership of the house, but also that, once they pass away and the loan is paid, the house will be passed on to the entitled heirs.

Another aspect worth mentioning is the fact that reverse mortgages guarantee homeowners the right to live in their houses until they die, sell the house, or decide to move. The only condition is for homeowners to be up-to-date with the correspondent property taxes and keep the house in a reasonable condition.

Moreover, if the contracted mortgage guarantees a monthly or annual income for life, any depreciation of the property's value will be the lender's responsibility. In addition, being considered equity and not proper income, payments are tax free and do not affect benefits such as social security or Medicare.

What should one do before pursuing one?

In order to avoid unpleasant surprises, seniors should do a thorough research before making a commitment and acquire a reverse mortgage. Carefully check eligibility, safeguards, pertinent taxes, payment plans, liability, interest rates etc. Information is widely reachable, both online and through direct discussions with authorized HUD or FHA counsellors or lenders.

Before making a lifetime commitment, it is highly important for seniors to carefully educate themselves and fully understand which their options are, how the loan process works, and which are their rights and responsibilities. [http://myreversemortgageloan.info]Educate Yourself Now! Understand how an FHA-Insured [http://myreversemortgageloan.info]Reverse Mortgage works and make an informed decision based on your own personal situation.

Article Source: [http://EzineArticles.com/?Reverse-Mortgage:-How-It-Works-And-How-It-Can-Benefit-You&id=8651830] Reverse Mortgage: How It Works And How It Can Benefit You