With interest rates continuing to remain at historical lows, senior adults are taking full advantage of a government-insured mortgage program to finance home repairs and improvements.
Growing public awareness of the reverse mortgage by senior homeowners is causing many to get work done to their home now instead of waiting. In today’s economy you can get good deals and save lots of money on home improvements. This special type of mortgage enables homeowners age 62 and over to turn a portion of their home’s equity into tax-free funds that may be used for any purpose.
The reverse mortgage is just like a traditional mortgage – but in reverse. Instead of making monthly payments to a lender, the lender makes loan advances to the homeowner. The amount a senior homeowner may receive is dependent on a set of factors including their age, the current interest rate, and their home’s value. The older someone is, the more they are able to receive. The best part about this type of mortgage is that there is no repayment for as long as the senior or their spouse occupies their home. Qualifying for a reverse mortgage is simple and does not involve income, credit, health, assets or employment.
Many senior homeowners utilize a reverse mortgage to make home repairs or to make improvements that enable them to stay in their home. This could include handrails, accessibility ramps, widening doors, custom home elevators, new roofing, exterior painting, new windows, weatherizing, winterizing and upgrading of old equipment such as furnaces or water heaters.
In addition to home improvements and repairs, many seniors utilize their funds to pay property taxes, medical expenses, or to pay off their existing mortgage and eliminate their monthly mortgage payment. Some assets and income are exempt for example Social Security and Medicare benefits are not affected by reverse mortgage proceeds.
The main consideration into looking into this type of mortgage is that the home needs to have equity in order to qualify. Unfortunately there are many people that could have qualified three years ago but because of the drop in the housing market their house lost the equity it once had.
I highly suggest that if you are interested in what a reverse mortgage can do for you that you talk with a reverse mortgage counselor. The people can not sell you a reverse mortgage so they will give you an unbiased assessment of your particular situation. As with anything a reverse mortgage isn’t for everyone.