As senior citizens experience how restricted cash flow can change their lifestyle, more and more are turning to reverse loans for help. A reverse mortgage for seniors comes with its own set of risks, like any other loan in the market. Here’s how it works:
Reverse mortgage basics
It works like a regular mortgage, with a loan based on your home. But unlike a traditional mortgage, you don’t have to pay for the debt until you move out of your home, sell the property or pass away. So if you own your home and find yourself strapped for cash, then this could be a good financial move for you.
Expanding the loan
Many seniors prefer to stay in their homes instead of going to a facility. According to Aging Care, with a reverse mortgage, seniors can pay for long-term care expenses at home and stay in there longer. This also allows seniors to live out independent lifestyles. It’s a helpful side benefit since a reverse mortgage for seniors also helps ease up the financial pressure on families. Long-term care in nursing homes can be expensive, with daily rates alone enough to set any family’s budget back. With a reverse loan, seniors can enjoy an independent lifestyle and ensure they aren’t putting any financial pressure on their families.
The advantages of the loan
The lack of monthly payments is a huge advantage. This is also a non-recourse loan, which means the heirs won’t have to pay for the loan in the event that the senior passes away. The proceeds are also tax-free and don’t compromise with SSI benefits or Medicare. This can be used to make ends meet or help pay for that emergency renovation, adult day care costs, medication or credit card debt, among many others. Be sure to check the conditions first to see if you and your spouse qualify.
