KingofHowTo.com Instructionals | News | Advice | Reviews

Reverse Mortgage Home Loans Allow Seniors to Retire Earlier

By Nathaniel Hutchinson
KingofHowTo.com Business and Financial Expert

11/16/2011


As prices rise and life expectancies ascend, many retirees struggle financially, and some are forced to return to work despite physical and mental limitations. Many banks already provide reverse mortgage loans for seniors to help them manage their expenses, and if you take stock in a recent report, the trend may become more popular over the next couple of decades.

Troubling times ahead?

According to a survey released by Wells Fargo & Co., 25 percent of respondents said they believed they'll need to work until they reach the age of 80, because they haven't been able to save enough money to retire.

How reverse mortgage home loans help seniors

Reverse mortgages are loans that allow homeowners to borrow against their home's equity; however, unlike standard home equity loans, lenders do not require repayment of the loan unless the borrower dies, the property is sold or the owner decides to leave.

Available to seniors aged 62 or older, these loans provide monthly cash that helps offset daily and monthly expenses. While standard home equity loans require consistent monthly payments and a minimum income-to-debt ratio, reverse mortgage loans are available to all seniors, regardless of their income level. Additionally, instead of making monthly principal and interest payments, the borrower actually receives money based on a particular payment schedule he or she selects.

How much money can I get from a reverse mortgage loan?

This depends on how much equity you have in your home. Typically, the older a homeowner is, the more valuable his or her property will be. Additionally, the lower current interest rates are, the more money you will typically get. You will also still be required to pay insurance expenses and real estate taxes; however, you can't be forced from your home even if you are delinquent on your remaining mortgage payment.

Related Kingofhowto.com Articles

  • Advice on Home Improvement Loans: Consider Home Remodeling Costs
  • Finding the Best Current Mortgage Rates
  • Many Left Asking 'Can I Get a Home Equity Loan?'
  • When Should I Refinance My Mortgage? More Saying Now
  • Should I Buy a Home? More Saying 'Yes'
  • Assistance for First Time Home Buyers