A reverse mortgage is a loan available to seniors over the age of 62 which allows them to convert equity in their home into cash. These loans were created to give seniors access to cash for expenses such as home improvements, unexpected medical costs, and in-home care by utilizing the accumulated equity in their homes. Click here to learn more or continue reading.
How can a Reverse Mortgage Help?
By using a Reverse Mortgage, a homeowner can avoid selling investments at market lows. No one knows how long the stock market is going to either continue this rapid decline or how long it will take to recover. In this time of extreme financial decline, a reverse mortgage could provide a means to either eliminate current mortgage payments and or supply funds necessary for day to day living expenses. In the past there has always been a recovery, but how long it will take this time no one knows. So instead of being forced to sell investments at such a low price, a reverse mortgage can eliminate the need of selling investments at “Fire Sale Rates”.
Why use a Reverse Mortgage?
Many market recoveries are v-shaped or u shaped and can often regain great losses within 18 months or so. But what about the meantime? By using a reverse mortgage, the borrower can eliminate current mortgage payments and pay only taxes, insurance, and upkeep. Often, along with eliminating the mortgage payment the borrower will have either cash at closing or a credit line to use for day to day expenses. After markets and investments recover, the borrower can repay all or a portion of the loan. If the borrower elects to pay back a portion of the loan, this money will be available as a line of credit to be used in the future if necessary. At present, most reverse mortgages contain a credit line growth rate. This means that money that is available in the credit line will be growing, and as time goes on the credit line will be increasing.
Because of the Coronavirus and the Oil feud between Russia and Saudi Arabia the stock market has had one of its largest drops in history. The Reverse Mortgage may be just the financial tool that helps many seniors weather this financial storm.
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