If you are about to be 62 years of age, this is a term that you must know; Reverse mortgage which allows a homeowner to borrow equity and works as a retirement tool. Want to know about the benefits that reverse mortgage has to offer? Read the article to know more…
1. Lender makes payment instead of the borrower
In case of a reverse mortgage, a lender pays the borrower and not vice-versa. Payment can be made as:
• Lump sum
• Periodic advances through a line of credit.
• Monthly for the time the borrower occupied the home.
• A combination of above three.
2. Provides immediate cash-flow
Reverse mortgage helps to get access to immediate cash when you have no retirement savings at all and are facing cash-flow problems. The money that you borrow can be used to pay the debt, live a better lifestyle in late 60’s or pursue activities from your retirement bucket-list.
3. Doesn’t require you to pay monthly mortgage payments
Unlike mortgage loans, a reverse mortgage doesn’t ask you for monthly payments and instead, you can pay at the end of the loan and hence the money you borrow can be used as a line of credit.
4. Save other retirement savings
You can save on your other retirement savings and extend their life by using a reverse mortgage to solve the cash problems you are facing as of now.
5. Chance for the borrower to get counseling
While dealing with a reverse mortgage the borrower is required to take counseling from a 3rd party which is an independent entity to explain the features of a reverse mortgage and other rules and responsibilities that the borrower will have to take on.
6. Peace of mind
What if an immediate medical expense arises and you have already exhausted all your savings which you had done for your retired life? A reverse mortgage can come to your rescue and therefore gives you a peace of mind and helps to accumulate cash for the unexpected events that come up.
7. Tax benefits
You will enjoy the tax benefits as the income from a reverse mortgage is not taxable although the interest is compounded.
Looking at the appealing benefits that reverse mortgage has to offer it seems to be an amazing retirement tool which can be used by cash-strapped retirees to live a peaceful and calm life!