More and more homeowners are turning to reverse mortgages as a financial solution. According to the Department of Housing and Urban Development’s FHA Outlook Report, the number of reverse mortgage applications increased by 11% from February to March of this year, with 7,398 homeowners applying for this type of financing. March was the second month in a row that showed an increase in loan applications. These numbers show that more homeowners are realizing the numerous benefits that this type of financing can offer them.

Reverse Mortgage Benefits Can Improve Your Lifestyle

For homeowners 62 and older, a reverse mortgage can be the best financial solution for their situations. This type of financing does not require the homeowner to make any monthly mortgage payments. With one less large monthly expense, the homeowner will have more money available and will not have to worry about losing his or her home due to delinquent mortgage payments.

If a homeowner has sufficient equity in his or her home, the equity can be converted into funds for the homeowner. The homeowner can use the money from his or her reverse mortgage for any expense, whether it is personal or for the home. Reverse mortgage options give homeowners the choice of how they receive funds. The amount of money a homeowner can receive varies, depending on age, home value and current interest rates. A homeowner can use a reverse mortgage calculator to get an estimate of the loan amount he or she could receive.

In this struggling economy, many homeowners are finding it difficult to keep up with their monthly mortgage payments, which explains the rising number of defaults and mounting foreclosures. The Obama Administration offered a solution for some homeowners with HAMP, but many homeowners do not qualify for the program. For homeowners who meet the requirements of a reverse mortgage, this type of financing could be the key to preventing foreclosure through the elimination of mortgage payments and addition of supplemental funds.

Requirements Homeowners Must Meet

This type of loan does not have any income or credit requirements. An applicant must be a homeowner and must be using his or her home as a primary residence. Home repairs, homeowner’s insurance and real estate taxes are the responsibility of the homeowner (these loans do have escrow accounts) and must be kept current in order to prevent the loan from becoming due in full.

A reverse mortgage can be beneficial to homeowners in a number of ways. The elimination of mortgage payments and the opportunity to receive additional funds makes this type of financing a very attractive option. Homeowners can enjoy their retirement years without using their savings or income to pay for their home.

These loan are not due until the homeowner no longer occupies the home. Once the mortgage is due, the homeowner will not owe more than the home’s value. This loan requires that the homeowner receives pre-loan counseling to ensure he or she is well informed of the loan requirements and can make a knowledgeable decision once all of the options are discussed. Senior homeowners should not have to spend their retirement years worrying about their finances and a reverse mortgage can help them eliminate that burden.

Author Bio: Victoria Belle-Miller is the newest member of the Senior Reverse Mortgage writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the reverse mortgage team!

Category: Finances
Keywords: erse mortgage, FHA reverse loan, HECM, HUD, seniors, equity, monthly payment, benefits, pros and con