Various housing troubles have caused a great deal of difficulty for homeowners but senior citizen homeowners have turned to reverse mortgage loans as a way to make their home loan payments nonexistent, in cases where homeowners may have financial trouble. Reverse mortgages allow homeowners to gain money from equity built in their home but, if the qualifications for this mortgage are adhered to, homeowners do not have to repay this loan during the time the reside in their home.
For this reason, a reverse mortgage has been helpful to numerous homeowners but there are a few things that financial advisors point out when it comes to using a reverse mortgage loan to erase mortgage payments. To begin with, a reverse mortgage is debt that must eventually be repaid, but for homeowners who pay their property taxes and keep their home as their principal residence, repayments will not be required in most cases.
Usually, a reverse mortgage is repaid through funds from the homeowner’s estate or by the sale of the home after a homeowner passes away. Yet, homeowners who feel that a reverse mortgage can be a good option for them may be able to rid themselves of any remaining monthly mortgage payments they may have.
Homeowners who have successfully used reverse mortgages to erase their monthly mortgage payments have had more equity in their home than they owe, and have been in a decent financial position, in terms of their credit score. While some argue that a home that is paid off or close to being paid off should not be subject to a reverse mortgage, homeowners who have limited income but are still repaying on their mortgage have used reverse mortgages for this reason.
Funds that are given from a reverse mortgage must first go to meet any remaining balance on the home, but in cases where homeowners have a good amount of equity built up, this is usually not a problem. However, counselors who are against reverse mortgages do still caution homeowners against entering into this type of mortgage lightly since there could be repercussions if a homeowner moves or is no longer able to claim their home as their primary residence.
Since this type of mortgage does not have to be repaid in most cases, interest does build, but again, is usually repaid after a homeowner passes away, which is one of the main draws for senior homeowners when it comes to getting money from their home from this type of mortgage.