Retirement is a good time in life The idea of retirement is one of the most looked forward to by many people. Following years of working it is usually time to retire and enjoy the benefits that have been gained after many years of hard work.
However, it is also a fact that for many of the retirees, money is often faster than they had anticipated it would be. This position raises the question of whether a reverse mortgage could be a viable way to build extra income during retirement.
Below, we examine some of the best reverse mortgage types for retired individuals. So, continue reading before you look for what company has the best reverse mortgage.
Types Of Reverse Mortgages
The following are some types of reverse mortgages namely; 1. Federally Insured Reverse Mortgage 2. Home Equity Conversion Mortgage 3. FHA Insured Reverse Mortgage 4. Non FHA Insured Reverse Mortgage.
There are three main types of reverse mortgages: What are the types of reverse mortgage loans? They are Home Equity Conversion Mortgages (HECMs), proprietary reverse mortgages, and single-purpose reverse mortgages.
HECMs are insured by the federal housing administration and are normally offered at lower interest rate and charges than most instruments. Private lenders give out proprietary reverse mortgages while the other kind is for single purpose, that is, for certain expenses.
What is advisable when comparing several options is to factor in aspects such as the interest rates, the charges, loan limits and any other cost that may be associated with the facility.
Eligibility Requirements
The eligibility criteria for taking a loan from the company are the following: The borrower must have a permanent residence in the country and must be at least 18 years of age Must not be in any form of bankruptcy.
The applicant should have a valid means of identification and a government-issued identification card The applicant should have a verifiable source of income, which will enable him or her to repay the loan as agreed
It is, however, not usually necessary to have a good credit rating as is usually the case with most conventional loans. Further, there are concerns that properties must meet stipulations about its condition, value and federal loan limits.
It also helps in determining which of the reverse mortgage plans will suit best for each individual by analyzing factors like home equity investments and ownership periods.
Government Benefits
The amount and type of benefits that would be available for eligible Kenyans would be affected by the proposed microinsurance model due to the way that it is implemented.
Another thing, which has to be discussed in relation with reverse mortgages is the effect on other governmental programs that are aimed at providing help for citizens with limited incomes and assets, such as Medicaid or SSI.
However, the money received from the reverse mortgage loans from the best home refi companies can be utilized to pay for their home care expenses and they are not restricted under the Medicaid asset tests in some situations.
Alternatives To Explore
Some of the other strategies that retirees can consider in order to supplement their income include; selling the home and moving to a smaller one, converting the home into a rental house and also live in it.
Taking home equity loans or home equity credit lines, waiting for social security benefits to mature, using annuitize, working part time, or making withdrawals from portfolio or retirement accounts.
It is advisable to assess the pros and cons of a reverse mortgage amid available options before proceeding with the plan that fits into your overall vision and objectives for retirement.
Conclusion
It is important to discover new ideas for financial management since this might allow retirees to have a financially free and stress-free life. FHA reverse mortgages also make it easier for elderly homeowners to access the equity in their homes before they die, yet they are still able to live in the house without having to make any monthly payments on the loan.
Knowing what can be offered and what has to be done and considering the plus and minuses related to your circumstances, you can make a decision whether home equity can help improve your retirement plans.
